The Cotton situation

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Material Information

Title:
The Cotton situation
Physical Description:
v. : ; 27 cm.
Language:
English
Creator:
United States -- Dept. of Agriculture. -- Economic Research Service
United States -- Agricultural Marketing Service
United States -- Bureau of Agricultural Economics
Publisher:
Economic Research Service, U. S. Dept. of Agriculture.
Place of Publication:
Washington, D.C.
Frequency:
five no. a year
bimonthly[ former may 1961-]
irregular[ former 1945/46-mar. 1961]
monthly[ former 1936-1944]
quarterly
completely irregular

Subjects

Subjects / Keywords:
Cotton trade -- Statistics -- Periodicals   ( lcsh )
Cotton trade -- Periodicals   ( lcsh )
Genre:
federal government publication   ( marcgt )
statistics   ( marcgt )
periodical   ( marcgt )

Notes

Dates or Sequential Designation:
CS-1 (Nov. 1936) -
Dates or Sequential Designation:
Nov. 1936-Apr. 1975.
Dates or Sequential Designation:
Ceased publication in Apr. 1975.
Issuing Body:
Issued by: U.S. Bureau of Agricultural Economics, 1936-Oct. 1953; by: Agricultural Marketing Service, Nov. 1953-Mar. 1961; by: Dept. of Agriculture, Economic Research Service, May 1961-Apr. 1975.
Issuing Body:
Issues for 1936-Oct. 1953 published by the U. S. Bureau of Agricultural Economics; Nov. 1953-Mar. 1961 by the Agricultural Marketing Service; May 1961-Apr. 1975 by the Dept. of Agriculture, Economic Research Service.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 020142316
oclc - 01768374
lccn - 63045282
Classification:
lcc - HD9070.1 .C78
System ID:
AA00013000:00028

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Full Text
3,40 2o 5


UNITED STATES DZPAnY:.:!T CF AGRICULTUS
Bureau of Agricultural Economics
Washington

CS-37 'ove.pver 29, 1939

THE COTTON SI TUAT I ON


This month s issue of The Cotton Situatinn includes I i
the regular annual outlook report on cotrion. Re- ,
leased. b the Bureau of Agricultural Economics and'
the Agricultural Marketing Service on Nove:.ber 7, i
the report has been slightly revised in keepin- with .
sub seouent develop-. ents. s ,

REVIEW OF RECET DwE. ELOP:TTSP:E1T S

A continued high rate of domesticc i.ll consumption, an increasca

rate of industrial production, a market increase in domestic exports,

and the recently announced Government lean all contrib-atod to the recent

strengthening of domestic prices.

A net advance of approximately one-half cent in domestic cotton

prices since the latter part of October raised the 10-market average nf

Middling 7/S inch to 9.45 cents per pound on Uovemlber 24. This was approxi-

mately three-fourths cent above the Nove.ber 1935 average and nearly 1 cent

above prices just before the outbreak of the European w-.r. It was only

slightly below the high for the season tn date.

In October dmcrestic mill consumption of cotton increased seasonally

over Septe-ber to a level 29 percent above October last year. The October

total was the fourth largest for any month on record. Mill activity, ad-

justed for seasonal variation, reZlained about the sa.i.e during the first 3

weeks of November as in October, according to trade reports. Since September,

however, manufacturers' sales of cotton -oers apparently have been consider-

ably below production, with a consequent reduction in unfilled orders. N'ever-

theless, unfilled orders are still believed to be fairly large. From August







CS-37 P -

through October, domestic mill consumption (1,940,000 running bales) was

333,000 bales larger than a year rtrlier .nd. the largest for the period

on record.

On tIo'-em.ber 24, Liverpool -prices o. Anmerican cotton were somewhat

lower relative to prices of Ini.an Oomra No, 1 and Brazilian Sao Faalo Fair

thnr a month earlier. American cotton, however, was in a con.si-erably more

favorable competitive position relative to Indian and Brazilian -rotwths and

in a somewhat more favorable position relative to ECyption Uppers than be-

fore the domestic eo.rort-panment prograri went into effect in late July. On

lNovcmber 4, the spread between the Livtrpocl and. New Orleans price of

American Mi ddling was about 2.60 cents, nearly 1 cent greater than a month

earlier and the largest spread since shortly after the close of the World

War. Furthermore, this spread probably was about 1. cents less than it

would have been e: cept for the domestic report subsidy p.:nent of 1.5 cents

per pound. The unusunily high spread reflects increased ocean freight rates,

high wv.r-risk insurance, r-nd other increased costs rf tr.,ns-sporting A-. erican

cotton to Liverpool.

ExTrorts of Ane.,ric-n. cotton during the month ending Iove:-ber 23,

totaling about 700,000 running bnles, wcre 43 percent larger than a year

earlier, 6oespitc sono reported. short:;go of shipping facilities for exporting

to the "c:ar zone" since lovor-:br 4. From Au4uFjt 1 to lNove'iber 24, domestic

e:.rports totaled nearly 2,200,0 bales, aind were about 700,000 bales or

almost 50 percent l::r6cr than exports to the sa.e d-.tc last season. They

wore slightly sii-.llcr th-an ox-ports during the corresponding period of 1937.

Exports to Great Britain from Auuast 1 to November 23 were nearly four tines

as large as the unusw-illy s:.iall ernorts of a year earlier; and o:orts to






cs-37


most other important European importing countries, other than the Gerr.ian-

controlled region, were from 15 to 70 percent larger than to the same date

last sea.son. Exports to Japan to November 23 were 16 percent zn.aller than

a year earlier.

Reports indicate that cotton mill activity in Great Britain, Fr2_nce,

Italy, and some of the other European countries has been at a comparatively

high level during recent weeks. In the German-controlled area of Europe, cot-

ton consumption is thought to be somewhat less than before the outbreak of

the war. In the Orient, cotton consumption has increased somewhat since

the early part of the season.

THE COTTON OUTLOOK FOR 1940
(Revised as of November 27)

Surm.:.ry

Cotton supxnlics a decline somewhat in 1940-41 from
present near-record level

The world supply of all growths of cotton in 1940-41 is expected
to be somewhat less than the record or near-record supplies of roughly
50,000,000 bales in each of the three seasons, 1937-38 to 1939-40. This
would be about a fifth larger than the average for the 10 years ended with
1937-3S. World nill consumption in 1939-40 is expected to about equal the
1939-40 crop, now estimated at approximately 27,g00,000 bales. This indi-
cates a carry-over of all growths of cotton on August 1, 1940, not materially
different from the neoar-record stocks of 21,500,000 bales at the beginning
of the current season. With the sane harvested acreage as in 1939, and
with yields equal to the 5-year, 1934-38, average the 1940 production of
American cotton would be considerably less than that of 1939. The 1940-41
foreign crop is excuected to show at least some decline.

The world carry-over of American cotton on August 1, 1939, was about
l4,o00,000 b-:les, a new high. Even with a below-average crop the indicated
1939-40 world supply of American cotton of 25,700,000 bales is only slight-
ly below the peak supply of 1932-33. It is a little larger than the 1939-39
supply and 3,o00,000 bales above the 10-ycar average. But as of late Novenber,
a little over 10,100,000 bales of the indicated supply is either owned or
held as collateral against loans by the United States Government, excluding
cotton exchanged to Great Britain. Very little of this is likely to be
available for consumptinr. or nerchandizing purposes during the current season
unless the price for Middling 7/g inch cotton in the 10 designated markets
advances above 9-1/2 cents in the near future or higher later on as additional
carrying charges accumulate.






Cotton Outlook


Should loan stocks at ttie end of the present season be about the
sa:e as at present the world carry-over of "free" American cotton on
Au'gaat 1, 1`40, including the cotton traded to Great Britain, might be
only a little larger than the small volume a year earlier. The total
supply of American cotton might reasonably be expected to be smaller in
19240-41 than in the present season.

The estimated 1939-40 world supply of 23,600,000 bales of foreign
grown com:acrcial cotton is 1,100,000 bales below that for the 1938-39
season but 8,000,000 bales more than in 1932-33. It is more than one-
fifth larger than the 10-year, 1928-37, average. It now seems probable
that the world carry-over of non-American cotton on August 1, 1940, may be
about the same as a year earlier but that the 1940-41 foreign crop may be
somewhat smaller.

World consumption prospects uncertain No increase in total expected

World mill consumption of all growths in 1938-39 was about 28,500,000
bales. This was second only to the peak ccnaumption of 30,600,000 bales
in 1936-37, and 11 r.prcent above the 1925-37 average.

Prospective increases in consuwation in the United States and in
certain foreign countries in 1939-140 -re expected to offset at least most
of the decreases in prospect in belligerent European countries and else-
where. RaBut there appears to be little likelihood. that total world con-
sumption of all growths will exceed that of 1938-39 and it may be con-
siderably smaller.

An ,y decrease in total world consumption in 1939-40 is expected to
be in foreign growths. The consumption of American cotton is expected to
exceed the comparatively small 1938-39 consumption of 11,281,000 bales be-
cause of a prospective substantial increase in the United States. Con-
sumption of American cotton in foreign. countries nay only about equal the
comparatively suI.ll quantity nf 4,500,000 bales consumed in 19 3-39. But
exports of American cotton are expected to increase materially as compared
with the unusually su.all volume of only 3,300,000 bales in 1938-39. Er-
ports seen likely to be sufficiently lacrg to result in an increase in
foreign stocks of American cotton on August 1, 1940 over the low- lovel of
a year earlier.

Cotton nricos end incomes front cotton rolativc)ly low

United States farm prices of cotton during the first 3 months of the
1939-40 season averaged 8.05 cents per poiud. or 7 percent higher than a
year earlier but were about 2.2 cents below the average for the 10 years
1928-37. With domestic export pynaonts, increased total supplies of
American cotton, and reduced total supplies of foreign cotton, the price
ratios of other growths to American in foreignt markets have increased during
recent months fron the low levels reached in the 1938-39 season, thereby
improving the competitive position of American cotton. Most of those ratios
in November averaged above the 10-yoar average.





Cotton Outlook
5

With prices about unchanged from the previous year and a United
States crop 37 percent below that of 1937, gross returns to farrirs from
cotton and cottonseed, excluding Government payments with respect to
cotton, in the 1938-39 season were about 35 percent smaller than in the
previous season and 30 percent less than the average for the 10 years
1925-37. Prices about equal to the average level for Au;ust through
17o:ember, together with the November estimate of the 1939 crop, would re-
sult in some increase in gross returns from cotton and cottonseed in
1939-40.. But GovernMent payments with respect to cotton will be such
.smaller in 1939-40 than in the previous season and total returns includ-
ing such payments will be less than for any season since 1932-33

Supply

Supply continues at record high levels

A world supply (carry-over on August 1, 1939, plus production or
innings in 1939c-40) of all cotton for the current season of about 49,300,000C
bales is indicated from prospects in late NTovenber. This is only slightly
less than the record high suop.'lies of e.cnh of the two previous seasons and
8,000,000 bales or about a fifth more than the average for the 10 years
ended 1937-38. It is 4,900,000 bales larger than the peak reached before
1937-35. Present (late November) estimates indicate a decrease of about
1,100,000 bales in the supply of foreign cotton, but the supply of American
is expected to be about 300,000 bales larger than in 1936-39. Wqrld supplies
of foreign growths have decreased about 2,300,000 bales since the peak reach-
ed in 1937-3, whereas s supplies of American cotton have increased by about
1,100,000 bales over those of 1937-38.

The 1939-40 su-ynly of American cotton is now estimated at 25,700,000
running bales, or about 300,000 Iorc than last season but slightly less
than the record supplies of 26,200,CCO00 bales in 1933-34. It is 3,800,000
bales or 17 percent larger than the 10-year averaCe.

In late November, howove-,r, a little over 10,100,000 bales.(excluding
cotton traded to Great Britain)- of the indicated 1939-40 world supply of
American cotton were in the United States Governiont loan stocks. This
figure compares with nearly 10,CO0,000 bales on November 30 last season.
Of the total current loan stocks approximately 6,100,000 bales are o:med
by the Gov-ri.amnt and 4,000,000 bales held as collateral against loans to
farnT3r. The r-duction of present loan stocks and the indicated world con-
sunption, vwo--ld -:ive an indicated world stocks of "free" American cotton,
including nill stocks, as of August 1, 1940 only a little larger than the
unusually s--all "frec" stocks on August 1, 1939. Fa-ncrs nay repossess
cotton held as collateral by repaying their loan plus carrying charges and
about 500,000 bales have been thus far repossessed from cotton placed in the
loan during the 193S-39 season. As of the end of October the loan plus the
carrying charges on this cotton was equivalent to about 9-1/2 cents per
pound basis MIiddling 7/9 inch. Carrying charges on loan stocks are about
0.05 cents per month. But as to the 6,100,000 bales of cotton o.nmed by the
Government, legislative restrictions prevent its sale in regular channels






Ccitsrn Out L.ok
I-
0

of trade during the current season except at prices substantially higher
than present values, i.e., equal to loan values nrlu- carrying charges
which now (lb.t: Noveminlr) range from 10-1/2 cents to more than 16 cents
for Middling 7/S-inch.

The estimated 1939-40 world commercial supply of foreign-grown
cotton, of ap-,ro.:in.telg 23,500,000 bales of 478 pounds net, is about
1,100,000 btAles less than that for last se:.son, but 4,200,000 more than
the 10-year averoee and 8,000,000 bales more than in 1932-33. It is, how-
ever, approximately 2,300,000 bales less than the peak reached in 1937-38.

Cotton, American, foreign, and. all growths: C-rry-over,
production, and supply


Am erican


begin- : Carry-: Pro- :
ning : over :duction:Supply
Aug : : :
: 1,0'.0 1,000 1,000


: bales


bales bales


Foreign


Carry-: Pro-
over auctionn:uppy
: : :


1,000
bales


Average :
1q23-37: 3,293 13,655 21,948


1,000
bales


1,000
bales


All growths


Carry-! Pro-
over 'duction:Supply
:


1,000
bales


1,000
bales


1,000
bales


6,033 13,365 19,39S 14,326 27,020 41,346


1932
1933
1934
1935
1936
1937
1938
1939 2/

10-year
average
1938


: 13,263 12,961 26,224 5,073 10,500 15,573 18,336
: 11,309 12,712 24,521 5,307 13,354 138,61 17,116
: 10,701 9,576 20,277 6,.39 13,466 20,305 17,5140
: 9,04l 10,495 19,536 6,031 15,646 21,677 15,072
: 6,099 12,775 19,373 6,651 18,421 25,072 13,649
: 6,235 1S,412 24,647 7,531 15,372 25,903 13,766
: 13,712 11,665 25,377 8,927 15,742 24,659 22,639
: 14,030 11,675 25,705 7,432 163163 23,595 21,462
: 1 as-- a oTercent ae of 10--,ar avern.ie -and


:
:*
:*


169.2
102.3


85.5
100.1


117.1
101.3


123.2
S3.3


120.9
102.7


121.6
195.6


23,461 41,797.
26,066 43,182
23,042 40,582
2b,141 41,213
30,796 44,445
36,784 50,550
27,407 50,046
27,838 49,300
of 1937


149.8 103.0 119.2
94.8 101.6 98.5


1/ Ginnin-;s from August 1 to July 31 plus the "city crop", which consists of
rebaled samples, sweeoings, and pickings from cotton damaged by weather, fire,
etc.
2/ Preliminary.
Conmilieo. fro:.i reports of the New York Cotton Exchange Service. American cotton
in running bales coun-ting round bales as half bales a-nd foreign in bales of 478
pounds net weight.

The indicated su, lies of In-"ian Lan', Egymtian cotton are about equal
to the 192g-37 average, but the. saply of other foreign growths is about 43
percent larger than average and almost double that of 1932-33. This marked
increase in supplies of foreign cotton other than Indian and t_'yptian has
taken pl.-.cc despite drastic reduction in supplies of Chinese cotton since the
boginnin,; of hostilities with Japan in 1937 ma-d mainly as a result of in-
creased supplies of Brazilian, Russian, and miscellaneous growths.


Season :


of 1937






Cotton Outlook
7

With prospects for comparr.'tively little change in the carry-over
of American and foreign cottons on Aur;ust 1, 1940, chx.ges in world
supplies next season will largely depend upon the size of the 1940-41
crop. Cotton-acrcage allotments under the 1940 Agricultural Adjustment
program will be C.bout the same as those for 1939 but estimated yields
per acre for 1939 are higher than averog-e. Somc, indications point toward
a reduction in foreign cotton production in 1940-41.

Carry-over at ne'r-rccord high

The total world carry-over of all growths on August 1, 1939, of
nearly 21,500,000 bales, was slightly (5 percent) less than the record high
of the previous season and equal to about 75 perce'.t of mill consumption
last season. This total was 7,100,000 larger than the avorsoe for the 10'
years ended with 1937-39, of which increase about four-fifths wvas in Ameri-
can. In 1939 the world carry-over of American cotton totaled a little over
14,000,000 bales or 300,000 bales mo-re than on Auuast 1, 1938, but the
7,)400,000-bale carry-over of foreign cotton -ras 1,500,000 bales smaller
than a year earlier.

The world carry-over of iLaericanL cotton on August 1, 1940, is expected
to be somewhat s:.maller than the record high stocks for the beginning of the
current season. The carry-over of foreigLn cotton seems likely to show little
change.

Production much below the peak, 'out bout averc.e

World production of conmicrcial cotton for the 1939-40 season is ex-
pected (in late Noveimber) to total about 27,0CO,000 bales. This is slightly
more than in the previous season and about 800,000 bales more than the 10-
year average. Such a crop, however, is nearly one-fourth less than the
record production of 36,S00,C00 bales in 1937-3). It is the third largest
in history.

The United States crop of 11,g45,000 bales of 47g pounds net, accord-
ing to the YIovomber estimate, is equivalent to approxim-.tely 11,675,000
running b.les. This is about the suae as that for last season, but 37 per-
cent smaller than the record 1937 crop. It is about 2,000,000 bales less
than the 10-year -.verage.

The 24,200,00C acres left for harvest in 1939 is about the same as
for last season, but about 30 percent below the 10-year avera..ge. The indi-
cated yield for. the current season is nearly 43 pounds larCer than the 10-
year average and, with the exception of the two preceding crops, the largest
in history. The high indicated yield for the current season, like that ef
most other ycoars since 1932-33, is largely accounted for by the selection
of land better adapted to cotton production, soil improvement, better seed,
improved cultural practices, and comparatively light boll-vweevil damage.

The production of commercial cotton in foreign countries in 1939-40t
is expected (in late November) to be about 16,200,OC0 bales of 478 pounds net.






Cotton Outlook


This is slightly ;more than in the previous season, the third largest in
history, anmd 2,COC, C(C bales rc- 21 -rrzont larger tha-n the 10-year (1928-37)
average, but 2,300,0C,." bles ni-s.ller thr'n the record crop of 193l-37. In
1932-33 the production of fereii cotton was only 10,500,000 bales or about
to-thirds the indicated crop for the current season. Thp prospective small
increase in the 1J39-40 crop in co.i;pariF;on with 1935-39 production is account-
ed for byr slight increases in Brazil, India, Egypt, and certain other coun-
tries these increases more th'n offsetting decreases in China and various
other countries.

Although production in several foreign countries has decreased some-
'hat front the pe.:.k levels reached a few ye.'-rs ago, the drop in the Chinese
crop of conmerci.al cotton fro:.- 3,200,CL.C in 3.936-37 tn only about 500,000
in 1939-40 explains a large part of this reduction. The current Chinese
crop :..s now Pstin-ted is less thn half a-s large as the average for the 10
years 1927-35. The charp upward trend in Bri.zilirn cotton production has
leveled off during the last few years, but the current crop of about
2,200,000 b,.les is appnroximn-tely twice as large as the 10-year average.
Russian production has increased naturially -nd in 1939-40 is estimated to
be arproxim.mtely almost double the 1C-year averwae. In 1939-40 the com-
parati-:ely high level of cotton production appears to have been about main-
tained or increased in Peru, Turkey, Iran, Chosen, Sudan, Belgian Congo,
Ugonda, and in certain other sn:-..ll producing countries. These smaller
cotton-growing countries, each producing less than 500,000 bales, in the
aggregate, account for a subst-.'ntical part of the total foreign crop.

The indic.-tt-d 1939-40 Indian co:.ariccical crop of a..bout 4,800,00C0
bales is not cre-.tly different from either thr.t of 1935-39 or of the 10-
year aver-ge (192.5-37). It is nearly 900,0.0 b.le:s lez.s than the pek pro-
duction in 1936-37. The indicated 1939-40 E yptin crop of 1,750,000 bales
is also about the sane as in the previous sar..son. It is about 500,000 bales
less than the peak production for 1957-3S and about equal to the average.

In the United States the l 40 n.ation-:l allot:.ont will be about
27,500,00'0 acres. Allotments for 1939 totaled about 25,000,000 acres, but
the area planted to cotton totaled only 24,900,000 acres. With yields per
acre equal to the :.verago for the 5 yea-rs 1931-3g, In acreage equal to that
planted last season would give a crcn 1,100,000 bales loss than in 1939.

Present conditions indicate that the crop in foreign countries
during the 1940-41 season nay be reduced souowhat below tha-t for 1939 but
it is likely to continue above the average for the 10 years 1928-37.
Should the doernand for food crops in relation to available supplies increase
uore than that for cotton, as no sc,'_,s probable, particularly in belligerent
countries, oottnn production in India, Egypt, and in a number of other coun-
tries might decline to some extent. Chinese production in 1940 may increase
over the unusually snall crop of 1939, particularly if weather conditions
are mnre nearly normal. In Brazil the sharp upward trend in production
seems to havn leveled nff; acnd with difficulty in making sales- for export
in that country's principal European :.i.rkets and with some possibility of
lover prices relative to competitive crops, acreage night be reduced some-






Cotton Outlook
9

what in 1940C. Some:'-hat the sae situation nvy prevail in certain other
countries such aLs Peru, Arg>-ntina, 1.:-rico, Tur-ey, and Iran. In Russia
it is possible that cotton pr,,uction bi.ht be stimulated by the European
war and the ui.sso-Geri.ian trade pact.

Con. tion

World- mill consunmntior increar;ed S^cornd lar iet on record

Torld. mill consumption of all .**;ro,,.ths of cotton in 193S-39 totaled
nearly 23,500,CC3C bales. This was -bout 800,000 rl.-Is more thi.n in 1937-38
and was 2,70'? ,000 bales 1-r,.:.r than the averra-e for the decrdo ended 1937-3g.
Although v;orld constu-rtion in 195`-39 wa-s the second l.r,.'ct in histoi" it
was 2,100,,1O b:les less than the -oeak consumption of 30,600,000 bales in
1936-37.

Mill consumption is C:T.-ected to decrease in elli j:crent Duropean
countries furinj 1939-40, as was the case during- the World War. This
prospective; ..ccr,-ase ni.m- be offset by the indicated increase in the United
States arnd in certain other countries. But there a':oars to be little
prospect *for total world consuiiption in 197;-40 exceeding that for 1938-39
and it rmay b considerably sn'.llL.r,

Unit d State:s consumption e:-.ct..d. to incrc.se again

Consumption of nearly 6,900,000 br.les of all growths of cotton in
the Unite' State.s during 1938-39 wzas the laricst, with one oxcc:-tion, since
1925i-2O. It uw.s about 1,100,000 bales more than that for 1937-3S and
approxirat.ely 00,000 bales more than the 10-year (1929-37) averr-e. In-
cre-ased consur.nr buying coupled with sri"ll stocks of cotton textiles in
channels of distributionn at the bcinning of the 193 -39 season stimulated
domestic i.'.ill consumption during the past season.

11ill sals and deliveries of unfinished, cotton cloth -and yam wore
unusually l-..rc ,-luring Auust and Septoebor 1939 and mill stocks of cotton-
te::tile -'aterials are now reyoortcd to be comparatively small. :ill con-
sunotion for the first 4 :onths, of the current season was well above the
high level for a year earlier. This and. prospects for a higher level of
industrial activity and pay.r rolls during the 1939-40 son.son, indicate that
conmru.Ttion in the United States will o::c.ctC that for last sea.on.-and it
may anpro::inate the record co.-s-unrc.tion,- of nearly 8,000,000 bales in 1936-37.

Mill consu'rcition in for -.in countries oe:poctcd to decrease

iiJ.ll consumption of all growths in foreign countries totaled about
21,700,000 b-.les in 1938-39. This was about 300,000 bales loss than in the
previous so'.so:- but .'pro::in tely 1,f00',000 'c-los more than the 10-yeoar
average. Should there be a :-.!torial reduction in the 1939-40 consumption
in bclligcrent Tuhropc.nui countries, -s now so,..n-s probable, it is unlikol.y
that incr.ea.scs in other forcing countries will be sufficient to counter-
balanco the dccreasnc.





Cotton Outlook
10

Co:-isuption of American cotton in countries other than the United
States decreased sharply in 1938-39, amounting to only slightly nore than
4,500,00:'0 bales, the smallest since the end of the World War (191--19)
and 2,3C',0 C' bales less than the 10-yea:: average. Consumption of Anerican
cotton in foreign countries totaled S,4Co0,000 bnles in 1932-33.

With Ancrican cotton constituti.n1g a somewhat larger percentage of
total -..orld. sup-lies in 1939-40 than in the previous season, with export
payments on Ajerican cotton, and with a probable greater decline in the use
of foreign cotton than AmQorigan in the German controlled area, the con-
sunption of Anerican cotton abroad is erected to constitute a larger pro-
nortion of total foreign consumption than in 1938-39. This is nore
especially so if the cotton trL'ed. to the British Government for rubber is
Made available to British spinners to draw on this season. Exports of
American cotton totaled only about 3,300,000 bales in 1938-39 the suall-
est in almost 60 years. And stocks of this growth in foreign cotton-con-
su:ning countries are now conp-.ratively E all. Early se.-son prospects
indicate a. nrked increase in exports frou the United States during 1939-40.
Fron Au-ust 1. to ITNoveber 24 e-:ports vcre about 50 percent larg,;r than a
year earlier.


Cotton, Anerican, foreign, and al.l growths: Mill consunrtion
in the United States, foreign countries, and the world


Season : United States Foreign countric
bcgin- : :_______ ... --
ning :A..ri-:Foreign: Total:A:' ri-: Foreignt
Au, 1 : cn : : can : .
:1,0 1,00 1,000 00 1,000 1,000 1
:balas bales bales bales bales b


totall


, 000
),lcs


:Antri-:
: can :


1,000
bn.10s


To rld

Foreign Total
:


1,000
bales


1,000
bales


Average :
1928-37: 5, 31 176


1932
1933
1934
1935
1936
1937
1938 2/


6, o04

5 241
6, 21

5, 7l6
5,736


133
147
120
130
1d 2
132
122


6,057 6,ss5


6,137
5,700
5,361
6,351
7,950
5,74s
6,358


12,819 19,705 12,767


s,31 o 10,133
Z,227 11,575
5,9.5 14,154
j,202 14,96
5,325 17,359
,254 1/1l6,744
4,345 17,115


1i,514 14,3855
19,902 13,780
20,119 11,206
21,178 12,503
22,6E4 13,093
1/21,998 10,'70
21,660 11,281


12,995 25,764

10,266 24,65l
11,822 25,601
14,274 25,4M
15,026 27,54
17,541 30,63
1/16 ,761/27,7A
17,237 28,53


10-ycar :
average: 114.5
1937 : 119.9


1938 's a percrcntage of 10-yeapr aver.go and 1937.


69.3
9,?.4


113.2
119.3


66.0
06.5


133.5
102.2


109.9 88.4
90.5 103.8


1/ Does not include 100,000 bi-lcs destroyed in China.
2/ Prcli:-in".ry.
Compiled fro:n re-oorts of the New York Cotton Exchange Service, oQ:ccpt United
Status conscuz.ition which is front Bureau of the Census reports. Anirican cottd
in running bales and foreign in equivalent bales of 478 pounds not weight.


132.6
102.1


110.
10 20


s






cotton Cutlook



If the British convoy system is successful, consumption of American
cotton in the United Kingdom and France in 1939-40 may not be materially
different from that consumed in these countries last season, although the
consumption of foreign growths may decrease with smaller exports of cloth,
and yarn and reduced consumption for non-military purposes. Consumption
of American ard the total of all kinds may decrease substantially in
Germany and in German-controlled territory (Poland, Czechoslovakia, and
Austria) where about 1,900,000 bales of cotton were consumed in 1933-39,
about one-third of which was American. This seems likely in view of the
British blockade, a shortage of foreign exchange and increased substitution
of rayon for cotton. The anticipated decrease in American cotton consump-
tion in belligerent European countries may be about offset by increases
in the consumption of American cotton in the neutral countries of Europe,
particularly Italy and Spain, and in Japan where cotton-textile exports
are expected to increase.

Cotton, American, foreign, and all growths: Mill
consumption in specified regions of Europe


Season I United Kingdom and : Germany, etc. ,Other European countries,
beginning: France : 1/ : excluding Russia
Aug. 1 AmericanzForeign: Total AmericarsForeign: Total AmericanFor.i.n: Total
: 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
: bales bales bales bales bales bales bales b:.les bales
Average
1928-371 1,988 1,802 3,790 1,239 765 2,005 1,454 1,00s 2,462

1932 : 2,173 1,373 3,546 1,546 407 1,953 1,725 672 2,397
1933 : 2,184 1,657 3,841 1,639 6S5 2,322 1,730 818 2,548
1934 : 1,476 2,151 3,627 818 843 1,661 1,351 1,212 2,563
1935 : 1,955 2,093 4,048 938 1,106 2,044 1,276 1,147 2,423
1936 : 1,810 2,419 4,229 746 1,174 1,920 1,040 1,198 2,238
1937 a 1.792 1,991 3,773 758 1,165 1,923 1,098 1,356 2,454
1938 2/: 1,577 2,409 3,986 560 1,325 1,885 1,013 1,465 2,478


1938 as percentage of 10-year averrage .nd of 1937


10-yr.av. 79.3 133.7 105.2 45.2 173.0 94.0 69.7 145.2 100.6
1937 : 8S.5 121.0 105.6 73.9 113.7 98.0 92.3 108.0 101.0

l/ Germany, Poland, Czechoslovakia, and Austria consumption in Austria partly
estimated on the basis of imports.
2/ Preliminary.
Compiled from reports of the New York Cotton Exchange. American in running bales
and foreign in equivalent bales of 478 pounds net weight.

Consumption of non-American cotton in countries other than the
United States totaled 17,100,000 bales in 1938-39 or slightly more than in
the previous season and was nearly 4,300,000 bales larger than the 10-year
average. It was the second largest on record. With a marked reduction in






Cotton Jutlook
12


the use of non-American cotton in belligerent European countries, total
consumption of such cotton may be dovn considerablyy in 1939-40 from that of
the previous season. Consumption of foreign cotton in the United Kingdom and
France amounted to abiut 2,400,000 bales in 193'-39.

With the increased cost of importing cotton, with increased competi-
tion from Americnn cotton, and with a probable decline in-cotton textile
exports, the consumption of non-American cotton is lik ly to be smaller
in England and France during 1939-40 than in the previous season. With
prospects of increased difficulties in obtaining cotton in Germany, a
substantial reduction particularly in the consumption of growths other than
American is expected. in German territory, where r.ore than 1,300,000 bales
of such cotton were cons'-Lumed in 19.38-39. These Jnticipated decreases in
the consumption of foreign growths in European countries now at war and
some probable decrease in other arenas se-m li'k-.ly to be offset to some
extent by an increase in Japanese: consum'Dticon c" :ion-AM:erican cotton and by
a continuation ..f the upwari trend in :.-ill consumption of native cotton in
India, Russia, Brazil, and various othur cotton-gro'.,ing countries.

Cotton: Prices and farm returns, United States

Cotton prices : Gross returns during marketing season
Total, including
Season : Weighted: Average : : : :Government payments
beginning: average : for 10 : : : Govrrn- : :Adjusted t(
Aug. 1 :received : desig- : Cotton : Cotton-: ment : :the 1.910-1
by pro- : nated : : seed :payments : Actual : level of,
Sducers : markets : : / : :prices pai
;,%.by farmers
:Cents per Cants per Million Million Million Million Million
pound pound dollars -iollars dollo-s dollars dollars
Average :
19?S-37 : 11.08 11.32 752.4 100.1 912.7 654.6

1932 : 6.52 7.15 424.1 40.4 -- 464.4 403.9
1933 : 10.17 10.81 630.0 4s.5 179.7 858.2 686.6
1934 : 12.36 12.36 629.1 105.9 115.2 850.1 649.0
1935 : 11.09 11.55 590.2 105.0 160.2 855.4 673.6
1936 : 12.33 12.70 764.4 141.3 82.4 988.1 737.4
1937 : 8.41 8.66 796.2 116.4 65.1 977.6 746.3
1933 : 9.60 8.70 513.1 S0.6 26o6. 859.7 682.3
1939 2/ : 8.85 8.90
: 1938 as percentage of 10-year average and of 193'
10-yr.av.: 77.6 76.9 62 0.5 --- 9.2 10.2
1937 : 102.3 100.5 64.5 69.3 40os.6 87.9 91.4

1/ Payments with respect to cotton.
?/ Prices for August, September, and October.







Cotton Outlook
13


Prices and Income

Cotton prices up slightly in the United States

The United States'farm prices of cotton averaged 8.6 cents in the
1938-39 season, or slightly higher than a year earlier but about 2.5 cents
below the 1928-37 average. The slight advance in cotton prices in 1938-39
occurred despite a decline in 'the general level of commodity prices and was
attributed largely to an increase in demand and to a reduction in supplies of
"free" cotton.

prices of spot cotton'continued high in relation ,to' prices -of futures
contracts throughout mnot 'of the 1938-39 season. This high basis':along with
high prices of near-month-futures in relation .to those for the more distant
months increased the hazards 6f accumulating and carry ing stocks of cotton.
But toward the end of the 1938-39 pFa-son, prices of spot cotton declined in
relation to prices of futures contracts.

During the first 3 months of the current season the price received by
domestic producer avora'-,d about 7 pt-rcint higher than a year earlier.

Liverpool price ratios of foreign growths to American increased

Prices of Indian, Egyptian, and. Brazilian cottons declined. in relation
to prices of American in Liverpool during most of 1938-39 and averaged con-
siderably lower than for atny other recent year. Considerable increase in the
ratios of prices of those growths to those of American has occurred since the
latter part of the 1938-39 season. In Nove.mb.;r 1939 these price ratios were
above the 1928-37 average, except in the case of Egyptian. The indicated in-
crease in supplies of Amcrica..n in relation to the total supplies of other
growths, along with export payments on American co-tton, are favorable to
maintaining or increasing the re-cent improvement in the competitive price posi-
tion of America.n cotton in foreign markets.

Farm returns from' cotton decrease

Gross returns to farmers from cotton and cottonsoci in the 1938-39
marketing season were almost 35 percent smaller th.-n in the previous season
anid 30 percent smaller than the average for the 10 years 1928-37. The decrease
in 1938-39 is accounted for largely by a decrc.ase of about 37 percent in the
size of the United States crop. The combined returns to growers from cotton
and cottonseed, together with a large increase in Government payments with
respect to cotton in 1938-39, were considerably less than in the previous
season ,.nd somewhat smaller than the 10-year average but were almost twice as
large as in 1932-33. When adjusted for changes in prices of things farmers
buy, gross returns from cotton and cottonseed in 1938-39, including Government
payments, were about 8 percent smaller than in the previous season but were
4 percent larger than the 10-year average.






Cotton Outlook
14


Should cotton prices continue through the rest of the 1939-40 season
at about the average level for August through November such prices, with the
Nov.-:mbEr estimate of the 1939 crop, would result in grow farm incomes from
cotton and cottonseed, excluding Government payments, in 1939-40 slightly
larger than in the previous season. With Government payments with respect


Cotton:


Spot price per pound and price ratios for specified
growths at Liverpool


Average price of : Price ratio for specified
Season : spot cotton / :growths to American Middling
beginning:American : Indian :Egyptidn :Brazilian: : :
Aug. 1 :Middling : Oomra. : Uppers : Sao : Indian :Egyptian :Brazilian,
7/8 : and : F.G.G. : Paulo : :
inch :No. 1 Fine Fair
Cents Cents Cents Cents Percent Percent Percent
Average
1928-37 : 13.26 10.12 15.46 12.93 76.3 116.6 97.5

1932 : 8.52 7.29 10.61 S.61 86.1 125.2 101.0
1933 : 12.47 9.35 13.77 12.28 75.3 110.8 98.8
1934 : 14.24 10.78 15.49 13.86 75.8 10o.8 97.4
1935 : 13.50 10.78 15.49 13.45 80.0 114.8 99.8
1936 : 14.62 10.87 17.40 14.12 74.4 119.0 96.6
1937 : 10.31 7.96 13.10 10.18 77.1 126.7 98.7 .
1938 : 10.15 7.14 11.80 9.63 70.4 116.5 94.9
1939 1/ : 10.62 8.08 11.90 10.12 76.1 112.1 95.3
: 1939 as percentage of 10-year average and of 1938

10-yr av.: 80.1 79.8 77.0 78.3 99.7 96.1 97.7
1938 : 104.6 113.2 100.8 105.1 108.1 96.2 100.4

1/ Average price for August, September, and October.
Computed from reports of the Liverpool Cotton Association.

to cotton this season much smaller than in 1938-39, even though larger than
the 1933-37 average, gross incomes including Government payments in 1939-40
would be less than for any other crop since 1932-33.

domestic Staple Situation

The domestic supply of nearly 8,000,000 bales of the shorter staple
lengths (shorter than 15/16 inch) will be somewhat larger in 1939-40 than the
comparatively small volume in the previous season, according to present indi
tions. The marked decrease in the proportion of the shorter lengths in the
supply of upland cotton during recent seasons (from a 10-year average cf 45
percent of the total to 33 percent during the last two seasons) reflects con-







Cotton Outlook
15

tinued progress in the improvement of the staple length of the United States
cotton crop. And despite th; d crojasod proportion of upland cotton shorter
than 7/9 inch, central-markct discounts for Mid531in 13/16-inch from the price
of Middling 7/S inch in the early p-rt of the 1939 season averaged nearly 90
points compared with the 10-y.ar avarac; (19-S-37) of only slightly more than
60 points. Thus, discounts for the rhortcr et.-.plc of upland cotton continue
comparatively wide ~*though staple premiums for cotton longer than 7/8 inch
have narrowed consi.cerzbl- during recent ye-irs,

The indicated domestic surply of stnpl's rani.'niro from 15/16 inch to
1-5/32 inches for the 1939-4.) sacnon of almost 16,500,000 bales is the largest
in history and roughly 6,000,000 b-.ls larger than. tlh 10-year average (192S-37).
With the marked actual .-'nd relative incr--ase in the supply of the medium and
long staples of American upland cotton ..'uring recent years, staple premiums
in central markets have narrowd substantially. For Middling 1-inch cotton
the average premium of only about 35 points in Octobcr of the 1939-40 season
compared with an aver.ae of approxi.'i.tely F5 points in 1938-39 and a 10-year
average of about S0 points. F:cr Mi`dling 1-1/16 inches, premiums were about
55 points against 85 points in 1936-39 rnd a 10-year avirar;e of 135 points.
For Middling 1-1/8 inches, promiuims in October w%.re about 150 points compared
with 1i0 for the previous season r.nd about 195 for the 10 years end-d with
1937-38. Increased relative pro;-uction and supplies of the longer staples
together vith the lowc.r level of cotton prices, have resulted in lower staple
premiums in recent y-ears. Expressed "is pcrc,:nta"-- of Middling 7/S-inch
staple, however, pr-emiuris for the current season compare somewhat more favorably
with av-ra.-e premiums over a period of cars. A comparatively large proportion
of the total EU'pply of 7/8-inch cotton ..ppears to be held in Govern.ent loan
stocks and it nay be that this has t:c.dc.i to hold up the.price of 7/S-inch in
relation to other staple l.in-ths. N-vcortholess, thLre still is ample incentive
for the production of the loniv-r lengths (lon,-;ur than 7/S inch) in those
regions where production costs arc about the same for the shorter as for the
longer staple varieties. And for st-aples shorter than 7/8-inch, discounts
are wider than the 10-year average.

The supply of upland cotton 1-3/16 inches -nd longer indicIted for
1939-40 is expected in late November to be considerably less than that for
the previous season and also less than average. The supply of this cotton is
comparatively small, averaging less than 300,000 b.,les in recent years. The
premium for 1-3/16-inches cotton cavorared about 290 points over Middling
7/S-inch in October of the 1939-40 season. This was about 6 percent lower than
the average premium of approximately 310 points last season and during the
10-year period ended with 1937-38. The premiums for 1-1/4 inches in October'
were about 10 percent lower than thc average for last season or the 10-year
period.

The supply of extra-lonC staple American-Egyptian and Sea Island cotton
is expected to be approximately 37,000 bales (5,000 Sea Island and 32,000
American-Egyptian) in 1939-40, or 10 percent more than in the previous season.




UNIVERSITY OF FLORIDA
rllilIAlIII IlI r I I Allll li NilHllI Eill
3 1262 08900 3965

Cotton Outlook


New England mill prices for Pine No. 2 1-3/16 inches (American-Egyptian)
averaged about 22.1 cents durinr-' the 1935-39 season against 24,6 cents ear1 l
this season. The consumption of A.merican-Egyptian cotton last season amount
to about 13,600 bales and Sea Islind to approximately 2,600 bales, whereau:t :
consumption of extra-lonr staple cotton imported from. Eypt approximated
50,000 br-les. Should there be difficulties in importing the extra-long ::!
staples of Egyntian cotton -- this :ncd. the relatively small stocks of suchb .
cotton in the United States at the be-inning of the current season may .
result in some increase in the demand for Arncrican-E(-yptian and Sea Islan. *
cotton during the 1939-40 season. But Wuring September and October Amerni
Eryptian cotton sold at a premium over imported extra-long staple Egyptia,.4:
cotton in domestic mill centers, whereas last season the opposite was t nI,-

"W"




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