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:
AA00013000:00030

Related Items

Preceded by:
World cotton prospects
Preceded by:
World cotton prospects
Succeeded by:
Cotton and wool situation
Succeeded by:
Wool situation
Succeeded by:
Wool situation
Succeeded by:
Cotton and wool situation
Related Items:
Statistics on cotton and related data


This item is only available as the following downloads:


Full Text

A 3C.


THE


--SITUATION


BUREAU OF AGRICULTURAL ECONOMICS
UNITED STATES DEPARTMENT OF AGRICULTURE


AUGUST 1940


CS-46


COTTON. ALL KINDS: IMPORTS AND CONSUMPT
IN SPECIFIED IMPORTING AREAS.1927-39
BALES NITED
II II KINGDI OM CANADA
3 La-----LI __.... __


i i
N



U.S DEPOSITOPY
1.___________ .._______________ ,ro_______


1930 1933 1936 1939 1927 1930 1933 1936
'IEAR BEGINNING AUGUST-
IMPORIS INWI ALL CON'INIF7TA EllRPOPEAN CObNITRfE E ACBP7
OfBRANY. PRANCE AND ITALY ARE CALENDAR YTAR BASIS
a IMPORTS INTO CANADA ARE YIA I BEOINNIN APRIL
DATA POR 1919 ARB PRELIMINARY


U S. DEPIITHENT or AGICULTUIII


1l I111 uiIIAU W AIIIICULIUAIL CODmrIIC


PRACTICALLY ALL THE COTTON EXPORTED FROM THE UNITED STATES AND OTHER
EXPORTING COUNTRIES IS CONSUMED IN THE FOUR AREAS SHOWN IN THIS CHART.
EXCEPT IN CHINA, THE COTTON CONSUMED IN THESE AREAS IS LARGELY IMPORTED.
COTTON CONSUMPTION IN JAPAN AND CHINA WAS NEARLY 2i MILLION BALES LESS
LAST SEASON (1939-40) THAN IN THE PEAK YEAR 1936-37 AND MUCH BELOW AVER-
AGE. IT IS BELIEVED TO HAVE BEEN MUCH ABOVE AVERAGE IN THE UNITED KINGDOM
BUT MUCH BELOW AVERAGE IN CONTINENTAL EUROPE. A CONTINUATION OF THE BRITISH
BLOCKADE WOULD SEVERELY RESTRICT 1940-41 IMPORTS INTO AND CONSUMPTION IN
CONTINENTAL EUROPE, WHERE CONSUMPTION IN RECENT YEARS HAS AVERAGED ABOUT
51 MILLION BALES.


LY .


2-I ~


ION

BALES
I MILLIONS I
I



S 0

B



7



6



5



4



3



2



1



0








CS-46


THE C OTT ON S IT UAT ION


Summary

Domestic cotton mill consumptiur dvrlr.g the next few months is expected

to continue exceptionally large. Exports of raw cotton, on the other hand, are

likely to be the smc.llcst for many decades if Great Britain is able to maintain

the blockade of continental Europe. Even with the record high domestic con-

sumption, restricted exports may reduce domestic disappearance to a level much

below average.

Last season domestic mill consumption, plus exports, totaled nearly 14

million bales, and exceeded domestic innings, plus imports, by nearly 2-1/2

million bales. This reduced the domestic carry-o7er from 13 million to a

little over 10-1/2 million bales. The carry-over, however, was still the third

largest on record. Present prospects for domestic consumption, exports, and

production indicate a substantial increase in the domestic carry-over at the

end of the current season. It should, however, remain materially below the

record high level of August 1, 1939.

Sales of cotton textiles by domestic manufacturers have been below pro-

duction during the last several weeks. Unless developments in the European War

adversely affect domestic business sentiment, manufacturers' sales are expected

to improve within the next few weels. Stocks of goods in domestic distributors'

hands are believed to be relatively low in view of their prospective needs.

Factors expected to strengthen the demand for domestically produced cotton

goods include: (1) Large Government purchases for defense and relief; (2) the

enlarged Government Export Subsidy Program; and (3) increased incomes of do-

mestic consumers.


- 2 -






CS-46


Eritish cotton mill activity apparently declined slightly during the

first 3 weeks of August. Pritiss! cotton mill consumption still continues at

exceptionally high le-ols, but is now considerably lower than in the first 3

weeks of July. Cotton mill consumption in the Orient continued relatively low.

In continental Europe, where the blockade has restricted available supplies of

raw cotton, consumption is no doubt also low.

Domestic prices of spot cotton appear to have been adjusting themselves

to a new crop basis within the lest 4 weeks. During the latter part of the

1939-40 marketing season the extremely short stocks of cotton in trade channels

was an important price-supporting factor. This was ture even though the

prospective increase in supply during August may have been discounted to a

considerable extent. Since early August innings from the new crop no doubt

have exceeded domestic consumption plus exports, with resultant larger domestic

stocks of "free" cotton.

-- August 28, 1940

PRICES

Domestic spots apain -ecline;
futures about uicharged or up slightly

Domestic prices of spot cotton in the last month continued the rather
steady decline which began in the third weel: of June. A net loss of 2/3
cent between July 24 and August 24 reduced the price of Middling 15/16" in the
10 designated markets to 9.62 cents on the latter date. This was 1.16 cents
below the relatively high price reached in June but 3/5 cent higher than a year
earlier. During the pe.st month the Government loan rates on the 1940 crop were
announced, with rates for Fiddling 15/16", on a net weight basis, ranging from
9.90 cents in the Carolina mill areas to 9.16 cents in western Texas and New
Hexico. The rate in most ports was 9.80 cents. These rates were about in line
with trade expectations and their announcement appeared to have had little in-
fluence on cotton prices. The rates on a gross weight basis are 0.40 cent
less than on a net weight basis, ranging from 9.50 to 8.76 cents. Compared
with last year's minimum loan of 8.30 cents on Middling 7/8" on a gross weight
basis, the minimum this year will be 0.51 cents. As of August 24 prices in


- 3 -







CS-46 4-

the 10 designated markets were from 1/4 cent below to 1 cent above the loan
rate in these markets.

On August 24 prices of active month futures contracts were from 0.01 to
0.24 cert below those of July 24. During this period the spread of spots over
futures was, therefore, materially reduced.

The decline in domestic spot prices during recent weeks appears to have
been due in part to the approaching marked increase in stocks of "free"
American cotton as the new crop moves in volume. The recent declines in mill
consumption in Great Britain, Japan, and China the most important markets now
open to American cotton probably also were factors in the price decline. Had
the latter factors been particularly important, however, it seems likely that
quotations on domestic futures contracts would have weakened more. The decline
in spots relative to futures suggests that increased innings from the new
crop were the most important factors influencing price changes during this
period.

Prices in Liverpool advance as mill
forwardings continue above imports

From July 26 to August 23 prices of the more important growths of
Amorican, Indian, Egyptian, and Brazilian cotton in Liverpool made net
advances between 1/5 cent and 1-1/3 cents a pound. A large part of these in-
creases occurred during the week ended August 16. This appears to have been
largely the result of the continued steady decline in port stocks during recent
weeks, growing fears of increased import difficulties especially following the
beginning of the intensified aerial warfare in the second week of August, and
uncertainties as to future shipments of cotton through the hed Sea. Data are
not available with rasect to stocks of raw cotton in British ports, but re-
ports from the American embassy during recent weeks have stressed the growing
concern on the part of members of the cotton trade over the declining port
stocks as forwardings to mills have continued in excess of arrivals.

During the month under review there was comparatively little change in
the relation of the price of American to the price of Indian and Brazilian.
The price of Egyptian Unpers, however, increased from 45 percent above Americani
Middling fair staple on July 26 to 53 and 51 percent above on August 16 and
August 23. With the exception of a short period in 1926, the average ratio
from August S-23 was the highest for any month since 1920. The actual prices
of Egyptian Uppers in terms of cents per pound are now the highest since
April 1930, and in terms of British currency since early 1929. When converted
to cents, the prices of Egyptian Uppers have recently been nearly 4 cents a
pound or one-fourth above the average for the 10 years ended July 1937, whereas
prices of American, Indian, and Brazilian (see accompanying table) were some-
what below the 10-year average. The exceptionally high prices of Egyptian
Uppers in relation to most other important growths are apparently attributable
to the declining production of this cotton during the last few years and
probably to the heavy British demand for such cotton for military and civil
defense purposes.
















10-yr. av. : Ct.
1927-28 to:
1936-37 : 14.5'
1936-37 : 14.6
1937-38 : 10.3:
1938-39 : 10.1i
1939-40 : 12.64


1938-39 -
June ....:
July ....:
1939-40 -
Aug, ....:
Sept. ...:
Oct. .... :
Nov. ....:
Dec. ....
Jan. ....:
Feb. ....:
Mar. ..e.:
Apr. ....:
May .....
June ....
July ....:


:rl


iW : Ac- :Au eri-: Ac-
Mid-
: tual : can : tual
ing : : Hid-:
: :dling :_
Ct. Ct. Pot. Ct.


r


5


13.60
13.16
8.78
8.71
11.79


Season,
month
or day


11.19
10.87
7.96
7.14
9.94


Ac- :Ameri-
tual : can
: Mid-
: dlingp
Ct. Pot.


: Ameri-:
: can :
: Mid- :
: dlng :


137.9

12,.7
113.5
124 .1


78.0
74.4
77.1
70.4
78.4


68.9
68.9

72.6
76.4
79.0
81.1
82.7
83.1
80.7
81.8
79.4
79,0
74.3
71.4

70.6
71.2
71.9
72.1
72.7
73.1
72.4
71,6


97.7
96.6
98.7
94.9
98.6


17.12
17.40
13.10
11.0O
15.7G


11.47
11. 3

11.35
12.49
12.03
12.70
15.80
17.50
17,14
17.17
17.64
17.44
18.26
19.54

19.59
20.07
19.10
19.37
19.34
20.14
21.01
20.71


DStrlo
SMid-
: dling :


Ct.

14.74
15.75
12.70
/10.9
3/


3/

T/

3/


13.23
13.86
13.60
13,52
12.82
12.87
12.71

3/
7/

4/12.71
S3/
-S/
0/
z-L/


Ac- :Arerican:
tual : strict :
*: 7 d-
: alinr :


Ct.


oC c.


New Orleans

American


: Liverpool, England : Osaka, Japan:
: : Indian : Egyptian : Brazilian : Ameri-: Indian :
American :Fine Oomra #1:F.G.F. Uppers :Fair, Sao Faulo: can : 1/ Acola
S: : As a: : As a : As : : As a :
: id- : : % of: : % of : : of : : : of :


11.37 77.1 12.65 l.r5 2.09
11.58 76.5 12.7 1. 2.96
9.95 78.3 8.79 1..2 2.91
!/.36 72.2 8.73 1.2 2/ 2.29
S/ 10.02 2.62


3/
I/


3/


T/
L,
11.29
o/
10.06
9.39
8.38
7.67
6.89
7.02


9.45
9.37


8.95
9.02
8.92
9.40
85.3 10.64
10.79
72.6 10.67
69.0 10.43
65.7 10.54
59.8 10.05
53.5 10.54
61.5 10.35


3/


4/7.82 4/61.5
/

-5/


10.55
10.50
10.30
10.10
10.10
9.90
9.65
9.50


1.59
1.24

1.21
2.19
1.73
2.26
3.50
4.C2
3.07
2.63
2.3
2.90
2.07
2.90


Y1


3/





5.19
3.17
2.98
2.77
2.33
2.36


2.56
2.88
2,83
3.23 4/ 2.31
3.01 "
3.25
4.09
4.22
Continued -


6


14.08
14.12
10.18
9.63
12.49


: dling
: Fair
:Staple


.
:

:*


10 .9
107.7

111.7
11.4
113.0
103 .'
111.7
119.2
124.7
131.5
131.0
134.7
144.8
147.5

149.4
150.0
145.5
145.3
147.5
153.2
152.9
150.9


10.18
9.85

9.37
10.71
10.45
11.59
14.14
14.87
13.94
13.23
13.47
12.95
12.43
12.71

12.61
12.88 -
12.54
12.83
12. "C
12.73
12.,3
13.32
13.30


9.38
8.95

8.53
9.79
9.41
10.79
13.32
14.12
13.11
12.53
12.88
12.36
12.02
12.60

12.44
12.71
12.46
12.75
12.61
12.65
13.23
13.22


92.2
S2.8

92.2
96.5
98.1
99.4
100.0
100.4
101.5
101.3
100.0
100.0
98.5
95.9

96.2
96.3
95.5
96.2
96.9
96.9
96.9


7.61
7,31

7.38
8.56
8.41
9.46
11.69
12.31
11.09
10.68
10.70
10.23
9.37
9.46

9.26
9.53
9.44
9.61
9.53
9.61
9.95
9.83


11.04
10.61

10.16
11.21
10.65
11.66
14.14
14.81
13.74
13.06
13.47
12.95
12.61
13.25

13.11
13.38
13.13
13.33
13.11
13.15
13.74
13.72


July 5
12
19
26
Aug. 2
9
16
23


....
....:

00....:

....
*. .:





*...:


-- -------


: Spread:Spread
: Liver-: Osaka
Ac- : pool : over
;ual : over : New
SNew :Orleans
:Crleesns:
CL. Ct. Ct.


-" "


--


t







Cotton: Spot price per pound, specified growths at Liverpool, Osaka and a
-New Orleans, specified periods -Contir.nued

Pies at Liverpool are compiled from reports of the Liverpool Cotton Association except for recent weeks which are
cables and reports of the New York Cotton Exchange. Prices were reported in pence per pound and converted to
e per pound at current official rates of exchange. Prices at Osaka are from "The Ten-Days Return of Cotton",
aka, and cables to the Bureau of Agricultural Economics. They were reported in yen per picul and converted to
s per-pound using monthly exchange rates as reported by the Federal Reserve Board* Prices at New Orleans are

SAverage of iinganghat, Yeotmal and Akora, referred to as Acola or the Acola group.
Average for 10 months. Ten months average for New Orlean 8.60.
Rot available.
July average.


.... ........
:,,iii,,,,, W ;"f0 IP G3
: @ j j 3* Cjpi
I~ii~ i;i II '~ 11111 11111
;,;,ErlllliI ~. ~ ~ .~J~~~~i







iRlslll ;; a s
s s X,@ s ss s : ss
8a' s: xj
s ~~~~ s:~ :~ s: s:~B~
,, ,s S:S ss s: S s s sssss
S : S





cs-46


Cotton: Spot price per pound at elew Orleans, Bombay,
and Sao Paulo, specified periods 1/


Season : BObay:
nnrh + :Indian:,
month


or day

10 .:r. av.:
1927-28
to 1936-3

1936-37
1937-38
1938-39
1939-40
June
July
1939-40
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
mTay
June
July
July 5
12
19
26
Aug. 2
9
16
23


SOomra:
fine:
Cents


7 : 10.06

10.08
7.27
6.57
8.14
7.17
6.81

6.76
7.33
7.46
: 8.61
: 10.50
:10.46
9.16
8.78
8.82
7.69
5.84
: 6.24
: 5.39
6.37
6.32
6.88
6.60
: 6.53
6.53
: 6.36


Sao Paulo: ew Orleans
Brazilian:American: Spread over: Spread o-rer
type :;Middling: Oomra at : Brazilian
5 : 15/16 : Bombay : at Sao Paulo


Celts


14.11

12.95
9.26
8.40
9.04
8.78
8.16

7.72
8.69
8.73
9.76
11.91
11.35
10.70
9.69
8.&7
7.58
6.69
6.82
6.97
6.98
6.66
6.66
6.37
6.62
6.57
6.45


Cents


12.99

13.45
9.24
9.o4
10.23
9.75
9.67

9.18
9.22
9.12
9.60
10.84
10.98
10.87
10.63
10.74
10.25
10.74
10.55
10.75
10.70
10.50
10.30
10.30
10.10
9.85
9.70


Cents


2.93

3.37
1.97
2.47
2.09
2.58
2.86

2.42
1.89
1.66
.99
.34
.52
1.71
1.85
1.92
2.56
4.94
4.31
5.36
4.33
4.18
3.42
3.70
3.57
3.32
3.34


Cents


- 1.12

0.50
- 0.02
0.64
1.19
0.97
1.51

1.46
0.53
0.39
- o.16
- 1.07
- 0.37
0.17
0.94
1.87
2.67
4.05
3.73
3.78
3.72
3.84
3.64
3.93
3.48
3.28
3.25


Minus sign indicates Indian or- Brazilian over American. Prices at Bombay
are from Bombay Cotton 2.--iual cand Financia. L'ews through March 1940.
April 1940 to date from 'ew York Cott'oi Exchange reports. They were con-
vertcd from rupees por candy of 7E'I p ".uzns at cur-rent rates of exchange
(buying rates in recent weeks) as reptod by the Fedoral Reserve Board.
Through August 1972 monthly do.ta are a-ergcos of daily prices; from Sep-
tember 1932 to dato aver-ge of Wednesday or Thursday quotations. Prices
at Sao Paulo are from official Brezilian publications and material from
the American Ccosular Service at Sao Paulo. Monthly averages are as
quoted through December 1334, From January 1935 to date they are averages
of buyers' and sellers' quotations. Prices were converted from nilrois
per 15 kilograms at current rr.tes of e-chango until Spotzotor 1934, October
1934 to February 10, 1935 at ope. or free narke' rates, and from February
11 to date at composite averages of official and free narkot rates; except
front Nov. 16, 19-31 through Apr. 10, 1939 when free market rates were used.
1/ Prices of Indian are spot or near futures prior to Septeuber 1932.
Front April 1, 1940 to date they are near futures.


- 7 -








CS-46


The rise i-i the price of American cotton in Liverpool and the decline i
the domestic markets have greatly increased the spread between these markets
during the last nonth. American Fiddling in Liverpool increased from 3.23
cents over American I'addling in New Orleans on July 26 to 4.22 cents on August
23. The spread on the latter date was approximately as high as at any time 3a
January, and with that exception the highres since immediately after the Worl1
War. It was more than twice the average for the 10 years ended July 1937,
Ocean freight rates plus war risks and ordinary marine insurance for cotton 9
moving from New Orleans to Liverpool on British vessels have remained unchan~
at 1.83 cents per pound since June 26 and have varied between 1.77 and 1.83
since the latter part of last December.

EXPORTS

American cotton: Exports in recent vreks
40 to 90 percent below average

In each of the 4 weeks ended August 22 exports from the United States
totaled from 5,000 to 31,000 bales, whereas during the corresponding weeks Iai
year exports ranged from 31 to 50 thousand bales. Compared with the average
for the corresponding weeks during the 10-year period ended 1937, exports dun
ing those weeks this year. showed a decline of 40 to 93 percent. During these
weeks because of the British blockade practically no cotton has gone to con-
tinental Europe. For the month of August last year exports to continental
Europe totaled 105,000 bales. The 10-year (192G-37) August average was 177,
bales. The importance of continental Europe a.s en export market for Ameriosi
cotton is furthe- indicated by the fact that durIng the 12 months ended July
1940 exports to this area totaled 2-1/3 million bales despite the countries
blockaded for periods of from a few weeks, as in the case of France, to 11
months as in the case of Germany. Average exports to continental Europe for
the 1C years ended 1937-38 amounted to 3,397,000 bales.

For the year ended July 1940 exports of American cotton totaled
6,175,000 bales. This total, 86 percent larger than the exceptionally small
exports the preceding season, was the largest since 1933-34 but 600,000 balSa
or 9 percent less than the average for the 10 years ended July 1938. Exporali
to the United Kingdom and China were about 4-3/4 times as large as the small.'
exports of the preceding season. Exports to France, Italy, Belgium, and Csfa
were from 1-3/4 to 2-1/4 times as large.

A continuation of the war situation about as at present would likely xH
sult in the smallest exports of American cotton since immediately following
the Civil Viar. Even in the markets now accessible to American exporters, tBi
ings of the domestically produced staple are likely in most instances to be
smaller than in 1939-40. This seems particularly likely in the case of: GPreV
Britain, where August 1 stocks were perhaps twice as large as the average f
recent years and where plans have been made to take the entire 1940 EgyptiS'
crop.


- 8 -






CS-46


Country of
origin and
destination


united States to:
Germany :......: 44
United Kingdom : 46
France ........: 13
Italy .........: 23
Spain ........: 10
Belgium .......: 5
Canada .......: 14


Japan *.... ....:
China .,.......
Other countries:
Total .......:


: .July :
y.av: : : :TI ':
:1928-20 :1 31 :193 :1940 :as a :
S to : : : : of :
:1937-38 : : : :1939 :
: 001,000 1,00 1,000 ,000
:run. run. run. run.
: bales Lales bales beles Pot.


0
42
0
0
0
0
20
42
2
, 14


-W-
525.0





142.9
221.1
100.0
51.9


August to July
TO-yr.av: : : :1939-40
1923-29 :1937-:1938-:1939-: as a
to : 38: 39 : 40 : % of
1C37-38 : : : :1938-39


1,000 1,000 1,000
run. rune run.
bales bales bales


1,227
1,310
656
570
21.3
155
228
1,4C8
286
643


654
1,552
716
505
1
190
246
691
23
1,020


321
401
338
276
17
88
229
864
86
707


19
1,889
724
542
270
200
412
914
408
797


19G 106 120 113.2 6,796 5,538 3,327 6,175


:1,000 1,000 1,000
:bales bales bales


1,000
bales


1,000
bales


1,000C
bales


Pet.

5.9
471.1
214.2
196.4
1,588.2
227.3
179.9
105.8
474.4
112.7


185.6


1,000 1,900
ba.les bales


:4
Egyp^t to
Unit eKing dom
France .......
United States :
Germany 2/ ....:
Italy .........:
Japan .........:
British India :
Other countries:
Total .......:

Brazil to
Japan ,,......:
United Kingdom
Germany .......:
France ........
Italy .........
Netherlands ..:
Belgium .......
Other countries:
Total .......


78 lb.478 1b.478 lb.^78 lb. Pot. 478 1b.473 1b.478 Ib.478 lb. Pet.


28.1





27.3
50.0
3.4


558
205
92
154
114
107
70
329


576
235
38
217
120
89
132
385


565
198
36
216
112
157
86
393


637
314
57
12
97
142
119
261


91 115 123 16 13.C 1,609 1,792 1,763 1,639 93.0
May : August to Iay


9/
rzr
-2/
mm-m
---
I--
--- mm
--m mm
--- m


68
44
0

6
10
3
64


82.9
258.8


100.C
166.7
150.0
266.7


33 113 189 395 103.2


Compiled from official sources.

SLess than 500 bales.
Includes Austria beginning January 1938.
Not available by countries.

rii


3/



ri
- m
- r m
--- is
---


102
155
374
48
8
12
20
55


288
171
223
104
50
27
20
148


154
245
70
55
26
37
22
165


324 774 1,031


-9 -

Cotton: Exports from specified countries, average 1928-29
to 1937-38, and seasons 1937-38 to deto


112.7
158.6
158.3
5.6
86.6
90.4
138.4
66.4


53.5
143.3
31.4
52.9
52.0
137.0
110.0
111.5


75.1


M II


- '--~--~------ --- -- u.


--


-~--~--~-c


28.6


774





- 10 -


Cotton: Exports from specified countries, 1935-39

: Period begn- : : : : :
: ning August 1 :
Country i A 1935-36:19s6-37 :1937-338:1938-391959-40
:to end of month:
: indicated : : : : :
: : 1,00 1,000 1,000 1,000 1,000
bales 2/ bales 2/bales _/bales 2/ bales

United States ......: July :5,973 5,440 5,598 3,327 6,175:'
India .............: : 5,094 3,607 1,721 2,685 2,100"1
Egypt ..............: : 1,694 1,828 1,7S2 1,763 1,689 I
Argentina .........: June : 178 139 24 86 89 .!
Anglo Egyptian Sudan: 184 244 235 291 135.1
Peru .............. 321 318 264 300 290 "
China .............: 185 243 335 270 18 3
Brazil .............: Tay : 472 729 774 1,031 774 .
Turkey ...........: April : 75 59 65 74 20.
Total 8 foreign : :
countries ......: : 6,203 7,167 5,210 6,500 5,065
Compiled from official sources except exports from India for 1939-40 which ar
estimated by the New York Cotton Exchange Service.
l/ Preliminary. 2/ Exports from the United States in running bales, exports"i
Trom foreign countries in bales of 478 pounds.
::i
Foreign cotton: Exports from most important
countries lower last season than in 1938-39

Data on exports for the year ended July 31, 1940 are not now available
for several of the important foreign cotton-exporting countries but the in-
formation available at this time indicates that the combined exports from thb
countries for the past marketing season were undoubtedly materially smaller
than during the preceding 12 months. Official estimates of exports from Ini
were suspended several months ago because of the war, but unofficial estimate
have placed total exports from India for the year ended July 31, 1940 at 1/i
million bales or more below exports during the preceding season.

Exports from Egypt, as officially reported, were 124,000 bales (7 per-'M
cent) less than in 1938-39. From August through May exports from Brazil wri
260,000 bales, (25 percent) less than for the corresponding period of the
previous season.

As shown in the accompanying table, exports from August through April,.'|
lMay or June from the 6 other exporting countries for which data are availabii|
are about the sane as, to 93 percent smaller than, in the corresponding per
of 1938-39.

Exports for July are available only for Egypt, where they were only
percent as larre as in July 1939. Practically all of the small quantity
ported to 3 countries the United Kingdom, Japan, and British India. If
were available for exports from other countries in recent weeks, they would.:
doubt show tFat in most instances exports were much lower than in the oorr...
spending period last year and that little cotton had been exported from t
areas to continental Europe. As long as exports from most of the foreign
porting countries to continental Europe are not possible or are greatly leslt,
than the usual amount, there will be increased pressure of cotton from thesis
exporting countries in those markets that are accessible.


CS-46


--- .,






cs-46 11-

DEMAND LdD CONSUrIPTION

UNITED STATES: Consumption
decline in Jaly is less than usual

The consumption of 598,000 bales of cotton t1, domestic mills in
July was about 7 percent larger than in June a.u;d 1.5 percent larger than
in July last year. The daily r.te of consumption in July, ho-7ever, was
slightly less thai in June but declinci '-y less th.n the usual amount.
The Federal Reserve Board's index of cotton coisuup.ition for July was 104
compared with 107 in June. When ar.djusted for seasonal vr.riction, the index
for July was 116 compared with 112 in June and 111 in July 1939. These
index numbers are from their new series in which the avera-Te for the calen-
dar yet'rs 1935 to 1939 represents 100.

The total of 7,746,000 bals consumed during the 12 months ended
July 1940 was about one-eighth larger than in the preceding season and one-
fifth larger than the preceding 5-year averpe. It wc's second only to the
record high consumption of 7,950,000 bales in 1936-37. All but 130,000
bales of the total for last season was Arerican cotton. Of this foreign
cotton a little loss than half, or 54,000 bales, ',,os Efgyptian cotton.

Trade reports indicate that sa.los of finished cotton goods by
domestic manufacturers were less than production d.urinf July and early
August, even though Government purchases are reported t.c have been fairly
large during part of this period. For the .'reok ended Au-Lust 23, ho.vever,
sales arc said to have definitely exceeded production. It is reported that
in some lines of heavy goods, nany mills are pretty well sold out for
several months ahead, but in most lines of goods this is not true. Never-
theless, it is generally expected th..t in the absence of exceptionally un-
favorable developments in Europe sales will materially increase within the
next few weeks. Domestic consumption in 1940-41 is expected to exceed the
near record consumption of the past season.

Factors expected to contribute to incres.ecod sales of cotton textiles
in the nor.r future and to a lar e co.-eu.iption in 1540-4.4 include: (1) Large
Government -ourchases for defense -nd relief; (2) the enlarged Government
cotton products export subsidy program; (3) increased incomes of domestic
consumers; and (4) activities on the part of the Government and private
organizations to sti-mulate domestic cotton consumption.

On A.ugust 26, 1940 an increase in the rates of Governmcnt payments
on most cotton products exported from the United States because effective.
The new rates are GO to 88 percent higher than the original rates effective
from July 27, 1939, when the export payment program inaugurated, to
* December 6, 1939 when the rates on most cotton products were reduced 47 to
50 percent. The recently revised rates on most products are from 3-1/2 to
3-3/4 times as high as the rates in effect from December 6, 1939 through
August 25, 1940.

In announcing the increases in the rates of payment on exports of
cotton products, it was pointed out that while no payment from funds now








s-46 12 -

available will be m. de on exports of raw cotton, increased efforts will be
made to expand further the domestic as well as foreign outlets for cotton
products. Further expansion of domestic outlet, will increase the domestic
nill consumption of raw cotton as will increased fureign sales of cotton
products, thereby tending to offset the reduce export outlets for raw
cotton. E..isting programs to widen domestic outlett: include those for en-
couraging the use of cott -n for cotton talc covering arnd in the manufacture
of fine writing papers, as well as for developing the use of cotton for in-
sulating houses and cthor structures. The Cotton Stanm Plan is still in its
early stages, but a very grod-ual expansion, of this work is planned. Material
expansion is contemplated in the cotton mattress program, however, under
which very low-incone rural families make their own mattresses. L.st year
the Department acquired 150,000 bales of cotton and 16 million yards of tick-
ing for mattress raking. It is hoped this year that from two to three tines
this amount of cotton c.n be used for this purpose. In addition, the use of
increased quantities of cotton is being: fitted into the national defense
program so far as possible.

In addition to those efforts on the part of the Federal Government to
stimulate cotton consumption, increased! efforts are also being nade by the
Cotton Textile Institute and the National Cotton Council. According to a
recent announcement by Mr. Oscar Johnston, President of the National Cotton
Council, "the industry is ready to launch the most thorough-going war in
history." "During the past 2 yourrs the Iational Cotton Council, representing
the industry, has made enormous stridco forward in increasing cotton consump-
'tion. With the 100 pTrcent alle-giance of the cotton producer to the cause,
with now and greater funds at our disposal, we shall be equipped to continue
the lonE-, hard struggle to regain lost markets at home and abroad through
advertising, constructive foreign trade program, and scientific research."

EUROPE: British mill activity continues
about unchanged at exceptionally high levels

During the week ended Au-ust 23 British nill activity declined to 85
percent cor.pared with 90 percent in the preceding 2 weeks according to recent
cables from the American embassy at London. This was considerably lover than
prior to July 22, when British mill workers' work-week was reduced from about
55- hours back to 404 hours. Manufacturers' yarn and cloth sales in most
recent weoks were reported as either dull or inactive. Mills were said to
have been losin, ground and in need of additional orders if further declines
in activity were to be avoided. The recent increase in British taxes, higher
prices for cotton textiles and other living costs, and war uncertainties have
tended to restrict sales of goods for the home market .even without the Govern-:
ment restrictions on such sales. In early June it was announced that effective
October 1 distribution of cotton goods for domestic consumers was to be re-
stricted to 25 percent of the level existing in the first half of 1939 but in
early August it changed to 37- percent. There was only a moderate improvement:
in sales for the home trade following the Government's announced decision to
increase domestic distribution. Export sales have been severely affected as
the result of war uncertainties, particularly the uncertainty as to the manu-
facturers' ability to make deliveries according to schedule.







cs-46


- 13 -


Little information is available with respect to cotton mill consump-
tion in the Gernan-controllad area, in Franlce, or in Italy. There is little
doubt, however, that such supplies of raw cott-n as are available in the
area under German control are be-inc ured rather sparingly, particularly that
going to civilian consumers. Since the British blockiwt has been extended
to Italy and France, it seens rcason-ole to expect that mill consumption in
these areas is now also compar.tively low.

ORIENT: Mill activity fairly well
maintained after earlier declines

Mill consumption of cotton in China, including Manchuria, during July
is estimaterd t 122,000 Lales compared with 130,000 bales in June. Mills in
Shanghai further reduced their rate of operations, with Japanese-owned nills
reported as operating at about 70 percent, Chinese nills at 75 percent, and
British mills at 70 percent. Mills in the occupied areas of China and in
Manchuria operated at about the sane low rate as in June, while those in
Chinese-controlled areas may hrve increased their operations to nore than 80
percent. Imports of raw cotton in June totaled about l41,000 bales. This
is in excess of the current monthly rate of consumption and has resulted in
sone increase in stocks of raw cotton.

Japanese exports of piece foods continued unfavorable in July with
shipments estimated at around 123 million square yards, according to a radio-
gram from Shanghai dated August 26. This conmpres with an estimated 110
million yards in June and 212 million yards in July 1939. Piece goods exports
front August through October are expected to continue unfavorable unless un-
foreseen developments occur. After October soom improvement is expected
owing to anticipated improved dcnand from British India, Netherlands Indies,
and French Indo-China.

Cotton yarn production in July including the cotton content of nixed
yarns amounted to 177,000 tales of 400 pounds. This compared with 192,000
bales in Juno and 223,000 bales in July last year. Export yarn production
totaled 121,763 Tbalcs of this amount. The decline in Japanese yarn produc-
tion for July reflects efforts of the industry to reduce yarn production to
low levels in keepinr with deflated outlook for exports of piece goods.
September yarn output is tentatively placed at between 150,000 to 155,000
bales which compared with almost 350,000 bales Septerber 1937 and 199,000
bales in September 1939.

Arrivals of raw cotton in Japan during July were below nill tnkings
for the sixth consecutive month, the difference amountinR to almost 74,000
bales. July arrivals also -ero below consumption. Wharf stocks of Anerican
cotton at the end of July were 1l,000 bales lower than at the end of June.

In India mill consumption of raw cotton was about the sane in July as
in June. It ras slightly less than consumption in July last year or the year
before. The total for the 12 months ended July, of approximately 2,950,000
bales of 400 pounds, was only 5 percent less than the record high consumption
of the previous season. The total for the season was equal to or larger than
that for any season prior to 193g-39.








- 14-


ACOGAGE, PRODUCTION, STOCKS, AID SUPPLY

United States cro
slightly reduced

A 1940 United Stn-tes cotton crop of 11,429,000 bales was recently
forecast by the Cro.' .e-orting Eo:-rd, on the >jsis of infornrtion gathered
as of August 1. Such a crop would be ne'.rly 400,000 bales (3 percent) less
than the 1939 crop end 2,100,000 b".les (or nearly 16 percent) less than the
10-year (1929-35) ave-a ;e. The indicated .cre.-e for harvest (estimated
acreage in cultivation July 1 less the 10-~re.r average abandoned) was about
800,000 acres (3 percent) nore than the acr- 'ge harvested in 1939. The
avera e yield per .acre, however, was forecast at 222.3 pounds per acre, which
is 15.6 pounds less than the average 1939 yield. The acreage used in this
estimate is S,550,000 acres, or*26 percent less than the 10-year average and
with the exception of the 2 years 19S8 and 1939 the smallest since 1899.
The indicated yield per acre, on the other hand, is 24.2 pounds more than
the average of 198.1 pounds.

In Arkans.s the cro- forecast is slightly above average, whereas in
Mississippi, Alabaria, Louisiana, and Oklahoma, the crops are forecast at
from 18 to 30 percent below average. In Missouri, South Carolina, and the
irrigated St;.tes of the Jest the crops are expected to be materially above
average.

The 1940 cro- is somnerwh.t later than that of 1939 in the MIississippi
Delta, Alabam2, and Tennessee. Innings nu to August 16 of 169,420 bales
were materially less than the 357,197 bales ginned up to the same date in
the past year.

Acreage planted in India slightly reduced

The area -laeted to cotton in India u.) to August 1 was officially
estimated at 13,454,OCO acres, according to a cable received from Bombay
August 20. This is 2 percent less than thL acre-gLe planted to that date in
the corresponding period last year, and the smallest area planted to that
date since 1934-35.


Cs-46








cs-46


- 15 -


August 1 conestic carry-
over drops 2,400,2uO bales

Total stocks of c..ttnn in the United St;.t.:-s orn Au.uast 1 of 10,536,000
bales were officially reported on Auw-ust 15 by the Bureau of the Census.
This was 2,437,000 less than the record stocks on }.'.d Au:Aust 1, 1939 and
937,000 loss than the total os of August 1, 1'-)9?. 2Th carry-over at the
beginning of the current season, however, V.'ws 90' ,0,)0 bales larger than that
for any ye.-r prior to 1938. With nrt Lxp..orts offici-:.lly reported at 6,175,000
bales and consumrption at 7,746,C000 bales .dor).tic eis-r..ppeiarnlo totaled nearly
14 million bales. This was the largest since 19c32-33 a nd ith thr.t exception
since 192'-29.

Of the total doinertic stock as of August 1, 1940, slightly more than
8,7000,00 bales were undor Govermrennt loan or owned by the Government. This
would. indicate a total of only 1,900,00? bales of "free" stocks; including
nearly 100,000 bales of foreign cotton. A year oarlicr stocks of "free"
cotton totaled almost 2,000,000 bales, including: bout the sane a-;ount of
foreign cotton. The "frje" stocks as of Aurust 1 this rcar rcre the snallcst
for that date since 1Q25. This was an important pri-.c--up-.orting factor.
"Free" stocks would have been reduced still further and prices wouli have
been somewhat higher than they were except for smul exp.,orts of recent weeks.
This nade it nuch easier than would have bten the case ha,.d exp orts been nore
nearly normal for n.rnuf:cturers andc norchants, including exportersto obtain
from the small "free" stocks the cotton needed in their op.rrtions.




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