The Cotton situation

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Title:
The Cotton situation
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United States -- Dept. of Agriculture. -- Economic Research Service
United States -- Agricultural Marketing Service
United States -- Bureau of Agricultural Economics
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Economic Research Service, U. S. Dept. of Agriculture. ( Washington, D.C. )
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UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of .Agricultural Economics
Washington
0-26 December 28, 1939
08-26 ____ .

THE COTTON SITUATION
-,

Summary
,. S '.,L: *-""" ."O'^ r"

'Downward revisions of the estimates of both domestic and foreign production

during the past month reduced the indicated 1938-39 total world supply of commer-

cial cotton by OO,000 bales, or less than 1 percent. The indicated world supply

is still the largest in history, reports the Bureau of Agricultural Economics,

although only slightly above that of last season. In addition to the recent re-

duction in the indicated total supply, the supply of cotton readily available in

regular marketing channels was further reduced during the 5 weeks ended December

15 by an increase of 1,025,000 bales in the reported stocks of cotton pledged

against Government loans in this country.

Despite the reductions in cotton supplies, domestic prices of-spot cotton

in the first part of December declined to the lowest point since early October.

On December 9 they were nearly one-half cent below the high for the season to

date reached on November 14. The average of approximately 8-2/5 cents for

Middling 7/8 inch in the 10 designated markets in the first 23 days of December,

however, was somewhat higher than a year earlier.

The slight weakness in domestic cotton prices in the first part of December

appears to have been due to developments with respect to demand. While domestic

mill consumption in November was nearly one-fourth larger than in November 1337

and the largest with one exception for the month since 1928,.this was perhaps
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about in line with expectations based on reports in November. Sales of cotton

textiles by domestic manufacturers, during November and early December were

probably somewhat less than output. Trade re-oorts indicate that some types of






manufacturers accumulated considerable stocks of unsold goods during this period

and have recently reduced activity somewhat. Nevertheless, it is generally ex-

pected that domestic mill consumption will continue at a rate much higher than a

year earlier during the remainder of the season.

Demand conditions in foreign countries during recent weeks.probably have

been somewhat less favorable than had previously been anticipated. In general,

manufacturers' sales of cotton goods during the past month were probably below

the restricted output. Cotton mill consumption in foreign countric-s in November

and early December probably continued at a rate lower than a year earlier. It is

quite likely, however, that consumption was not so much below a year earlier dur-

ing this period as during the first quarter of the season when mill consumption

is estimated to have been 9 percent less than in the first quarter of the 1937-3S

season.

Foreign consumption of American cotton in November continued exception-

ally low but also may have made a more favorable comparison with lap.st season

than in the 3 preceding months. From August through October foreign mills are

estimated to have consumed nearly one-fifth less American cotton than the com-

paratively small quantity consumed in the first 3 months of the 1937-3S season.

Foreign consumption of American cotton so far this season has made a much more

favorable showing compared with a year earlier than have exports, which through

December 20 were two-fifths less than fzrm August 1 through December 20 last

season.

Despite the recent downward revision in the estimated 1938-59 production

of American and foreign cotton, it still seems likely that world production will

materially exceed the 1935-39 world consumption. This seems especially likely

in the case of American cotton. Consequently, the world carry-over of American

and, in turn, all cotton on August 1, 1939, is expected to be even larger than

the record high carry-over on August 1, 1939.


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PRICES

From the latter part of October to the end of November the daily price of
Middling 7/8 inch cotton in the 10 markets ranged between 8.57 and 8.75 cents per
pound. During this period the change in prices from day to day was unusually small.
On December 2 and 3, however, a net decline of 28 points reduced the average price
in these markets to 8.33 cents. This price was the lowest in 2 months and 42
points belQv7w the high for the season to date reached on November 14. From
December 3 to December 23, the average price in these markets fluctuated between
8.30 and 8.56 cents. In December 1937 the average price in these markets was 8.16
cents.

During the past few weeks the price of American Middling 7/8 inch at
Liverpool has shown a very marked increase relative to Egyptian tUppers. On
December 16 the -'rice of Egyptian Uppers averaged only 118 percent of the price of
American Middling 7/8 inch cotton, whereas in September the ratio averaged 128.
The 10-year average ratio is about 118. American cotton prices in Liverpool have
continued relatively high in relation to Indian and Brazilian during the past few
weeks.

Cotton, spot price per pound, specified growths at Liverpool, specified
periods

American : Indian : Egyptian : Brazilian
Season, : :Av. 3 types l/: F.G.F. Uppers : Fair, Sao Paulo
month : Mid- : Low : :As a per- :As a per- : :As a per-
or : dling: Mid-: :centage of: :centage of: :centage of
day : 7/8 :dling:Actual: American :Actual:Amer. Mid.:Actual:Amer.Mid.
: inch: V:2: : :
:Cents Cents Cents Percent Cents Percent Cents Percent
10-yr.1927-28:
to 1936-37 av. 14.50 13,60 10,88 78.3 17.12 117,9 1.,08 97,7

1936-37 : 14.62 13.16 11.07 79.8 17.40 119.0 l 4.l2 96.6
1937-38 :10.31 8.78 8.02 83.9 13,10 126,7 10,18 98,7
1938-39
Aug, :9,76 8g.44 7.38 lO 12,30 126.0 9-46 96,9
Sept. : 9.59 8,29 7,07 79,1 12,27 128,0 9,27 96,7
Oct. : 10.25 8.96 7.22 75.0 13,03 127,1 9,78 95,3
Nov. : I0.04 8.81 7.28 77.3 12,63 125,8 9,63 95-9
Dec. 2 : 10.02 8.55 7,06 76,1 12,28 122.6 9,53 95-1
Dec. 9 9.67 8.21 6,91 77.3 11.77 121.7 9.18 94.9
Dec. 16 10.04 8.58 7.14 76.7 11.89 118.4 9.55 95.1
Compiled from reports of the Liverpool Cotton Association except for the last
week which cane by cable and from the December 17 report of the New York
Cotton Exchange. Prices were reported in pence and were converted at current
rate of exchange.
l/ Includes Fully Good Broach, Fine Oomra #1 and"Fully Good Sind.
?2/ Average of American Middling and Low Middling.


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EXPORTS

Exports of American -reaches lowest level in two decades

Exports of American cotton in November totaled 4gl,000 running bales por..
40 percent less than a year earlier and were the smallest for the month since
1919-20, according to reports of the Bureau of Foreign and Domestic Commerce. FDr
the 4 months August through November exports totaled 1,535,000 bales and were
900,000 bales or 37 percent below those of the corresponding months last season.
As compared with the Q10-year average, 1927-36, exports during the first 4 month'
of the current season showed a decline of 4g percent, and were the smallest for
the period in 21.years. According to trade reports, exports during the first 20
days of December were approximately 47 percent below those of the corresponding-
period last year. From August 1 through Deceriber 20 exports were two-fifths leos
than in the corresponding period last season.

With the exception of Japan, exports to most of the important foreign
consumers have been much smaller than during the same period last season and
greatly below average. Exports to Japan so far this season, however, have been
something like throes and one-half times as large as the exceptionally small ex-
ports a year earlier. The favorable comparison with last season is due entirely
to the fact that Japanese takings were exceptionally low during the first part of
the 1937-5S season as compared with the average for the 10 years ended 1936-37.
Japan's takings during the first 4 months of the current season showed a decline,
as compared with a year earlier, of 51 percent.

It is still expected- that United.States exports of cotton during the latter
part of this season will make a somewhat more favorable showing in comparison
with a year earlier than has been true so far this season.
DEMAND AND CONSUMPTION

UNITED STATES: Domestic consumption now running well above last year

Domestic mill consumption of raw cotton totaled'596,000 running bales in
November, 23 percent.larger than a year earlier and the largest with the exception
of-November 1936 since 1929. The total of 2,235,000 bales from August through
November was. slightly larger than in the corresponding. period last year and,
with the exception of 1936, the largest for the period since 1929.

According to trade reports, domestic manufacturers' sales of cotton goods
have apparently run below production for the past few weeks. Some types of mills
are reported as having accumulated rather large unsold stocks and to have reduced
mill activity during the early part of December. The annual rate of consumption
during the first 4 months of the current season was about one-sixth above the
5,74S000 bales consumed during the 1937-35 season. While consumption during
the remainder of the season probably will average much higher relative to a year
earlier than during the first 4 months of the .season, this could easily occur
and yet have the annual rate of consumption average somewhat lower than during
the period from August through November.




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FOREIGN CONSUMPTION: Foreign mills less active than last season

In foreign countries generally, cotton mill activity in November and
early December was probably some-hat lower than a year earlier. But it is 1uite
possible that consumption ;as higher relative to a year earlier than during the
first quarter of the season when cotton mill consumption outside the United States
was, according to estimates of the New York Cotton Exchange Service, 'S percent
less than in the first 3 months of 1937-39. Reports from foreign mill centers
indicate that, on the whole, manufacturers' sales of cotton goods in the past
month w-7ere probably below the restricted production. Nevertheless, it is ex-
pected that mill consumption during the latter part of the season will average
higher relative to a year earlier than during the first part of the season.
This would be true if the monthly rate established during the first quarter of
the season were maintained. Such a rote would, however, result in a smaller
total for the season than was consumed last season. Foreign mill consumption of
American cotton from August through October this season was 269,000 bales or 19
percent less than in the first quarter of last season.

EUROPE: l/ Cotton mill -'ctivity continues _t gren.tly restricted level

Developments in the European cotton demand situation during November were,
in general, not very encouraging. Political uncertainties in variousquarters
continued to inspire caution and the imnrovemsnt in the textile tridcs which
seemed to be u.der way in October, notably in England and France, was hardly
maintained. In early December, however, improverient in France was again reported.
In general, it ap-pears that in the countries where exchange remains free, the
price situation ?and the difficulty of obtaining war risk insurance on warehoused
cotton contributed to bring about reduced imports of raw cotton. This situation
along with the restricted cotton mill activity and the high prices of spot
American cotton relative to prices of futures contracts and relative to foreign
cottons largel;:r explains the small imports cf American cotton by European coun-
tries so far this season.

United Kingdom

The improvement which appeared in the British textile trade in October
was scarcely maintained through November and early December. Although manu-
facturers enjoyed fairly good business for the home market and in goes required
by the government, the ex-oort demand through most of November and early December
was greatly below average. Though some manufacturers made further price conces-
sions, sales of cotton textiles are said to have been considerably,-. below output*

Weaving activity, according to unofficial estimates, continued at about
60 to 65 percent of normal, and trride reports indicate that u-nless sales soon
pick up activity will be restricted still further. Spinning activity held at

I/ Based largely on reports prepared by Agricultural Comriissioner Arthur W.
Palmer, London, England, and Agricultural Attache Lloyd V. Steere, Berlin,
Germany.


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about 70 percent of single shift capacity in November- but sales of yarn were
also slow with- nost :sales restricted to snail quantities. Doubt as to the future
oe: the remaining voluntary agreements for the maintenance of price margins is
stated to be a factor tending to retard yarn purchases, and much of _Tovember's
new business in yarns is said to have been booked by firms outside the agreementE
At one time in the month, reports were current that Eg&ptian yarns of Czecho-
slovak manufacture, rendered surplus by the dislocation of business in that
country, were being offered in Manchester at as much .s sixpence a pound under
Lancashire.,spinners' prices. With successively loner prices of the various
futures contracts maturing through the remaining months of this and the early
months of next season, a disposition to avoid the accumulation of inventories
of raw cotton as well as of cotton textiles and, where possible, to reduce then,
seems to be general.

Relative to general demand conditions, the October index Df business
activity in the United Kingdom (index of the London Economist), while 9 points
below October 1937, was about 2 points above the figures of May and July. The
index of employment for October sho-ed no material change from previous months.
It is expected that general business activity and employment in NTovember were
both well maintained compared iith October.

In the export field, yarn exports of 11.5 million pounds in October were
greater than in any other month of 1935 except Mlarch.. They '.ere about 8 percent
larger than in December 1937 and nearly 37 percent nbove thz'se of June though
more than 11 percent below the figure in October 1937. On the other hand, piece
goods exports, which account for a consumption of raw cotton roughly three times
that of yarn exports, sho,.ed no gain in October over September and were about 25
percent below exports of September 1937. The cheapening of the pound sterling
ihich from the end of June to December 20 amounted to roughly t percent may have
delayed purchases of cotton textiles by foreign buyers. But the lower value of
the pound sterling, particularly if stabilized, should tend to stimulate exports
The new trade agreements which go into effect on January 1, 1939, may also prove
favorable to cotton textile exports.

Arrivals of American cotton so far this season continued to lag behind
those of last season, the 187,500 bales received to Wovenber 24 being but 33.5
percent of imports to the corresponding date last year; while the 55,000
bales at sea were only 26 percent of the quantity afloat for British -orts a
year earlier. Imports of cotton of all kinds for the season to November 24
'were about 70 percent as large a.s those of last seas,'n to this tine. But
British port stocks of all kinds of cotton on November 25 w-ere reported at
1,08S,400 bales, equal, at current rates of consumption, to possibly 5 months'
requirements, with allou:ance for a minimum necessary.residue.

France

In France indications are that the improvement in the demand for textiles
in October continued well into November. Although the volume of business nay
have been some'That'less than had been expected, it was sufficient to afford
somewhat better margins to spinners. By the middle of the month, many spin-
ners and manufacturers had booked orders for their entire production through




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March of 1939. The situation was thought to be further.strengthened some.-
what by the fact that scme of the larger metropolitan retail establishmre.{ts
apparently have delayed beyond the usual time a part, of their seasonal
purchases, and b- the projects of a fairly good export trade in December and
Januar- when buyers for the colonies are usually most active. French rm.anu-
facturers, norecver, because of their considerable takings of Egyptian raw
cotton, most o:f which enters at Marseilles, are in a position, under the
new oronortionn.l inport quota arrangements to increase their present small
share of Eorpt's textile imports to about 13 percent of the E yptian total.

In early .Tovember, activity may .ave been stimulated somewhat by
the expctaticn of the publication -f the decree laws for the public
safety under the plenary powers granted the -overnment at the be^-i'minq of
October. That these momuros, whatever their substance, would quite surely
have far-reachin? effects both upon costs of production and upon purchasing
power of consumers, seems to ha,.ve been taken for granted.. The decrees'
effective November 15 were published November 14 as the first, installment
of a 3-year plan of national rehabilitation. .

Some slowing dom1 of trading activity is re7,orted to have followed
the announcement of the decree because nf the uncerta.in.ties as to its ef-
fects. Later in the .month the prosnective general labor strike was unfavor-
able to new orders. An improvement in the French cotton textile situation
is said. to have occurred folo'7in,; the collapse ,of the general strike on
November 30.

Germany

Late '.Iovember reports on the German cr.tton textile industry indicate
that production in both the sninni'-r and :.:c'ving branches continues to
be limited only by the restricted supplies .f raw material and to some
extent by shortage of skilled textile workers.

Exhort demand for German textiles aooears to hnAve been fairly 1'ell
maintained during the third quarter of.1933, notwithstanding' the crisis
in September and the continuing recession in der.:and from the For EVst
incident to the Sino-Japanese conflict. Business in knit goods a-.oears
to have been particularly well nmint-ined up t., the end of September.


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Activity in the German textile induatty as a whole in the past 2 or
3 months entered a seasonally more active period which was reflected this
year-more than in the past in increased working time rather than the employ-
ment of more workers. The textile industry, like all other German industries,
is confronted with an increasingly serious problem in obtaining not only new
workers, but ordinary replacement of workers leaving for one reason or another.
In November many plants were said to have been operating 56 hours and some
even more hours per week. Even longer hours seem likely to be the rule during
the months ahead, provided the necessary raw material can be obtained.

Switzerland

Late November reports from Switzerland indicate a definite improvement
in retail demand for textiles, perhaps largely a result of the restocking of
retail shelves after a period of noticeable restraint in retail buying incident
to the autumn crisis. A certain amount of seasonal improvement in export
demand for-cotton goods, particularly in prints, is also reported, but Swiss
cotton cloth mills are generally not very optimistic about the export outlook.
An important factor in this pessimism is the prospect of further curtailment
in the trade with Germany, as a result of the steady decline in Swiss imports
from Germany, which will, sooner or later, bring an automatic curtailment of
German purchases under the clearing agreement.

Sweden

A report of November 25 from Stockholm carries information pointing
to the recent appreciable pick-up in Swedish imports of nearly all classes
of textiles and textile materials. Imports of raw cotton in October totaled
2,070 tons (equivalent to 9,547 bales of 4-? pounds) as compared with 1,531
tons (equivalent to 7,061 bales of 479 pounds) in October of last year.
Increases are also indicated in takings of both yarn and piece goods. This
report interprets these figures as pointing to an improvement in activity in the
Swedish textile industry as well as some building up of stocks in the hands
of the textile distributing trade. While seasonal factors are credited in part
for this development, it is also reliably indicated that it is in part due to
a rather general effort now b-ing made in Sweden, with at least Government
encouragement if not assistance, to enhance supplies of various essential
products.

Poland

A new barter agreement now exists between Poland and Iran (Persia) by
the terms of which Poland will purchase 13,000 metric tons (59,958 bales of
478 pounds) of Iranian cotton. Formerly this contingent was taken by the
Soviet Union but Iran has nom discontinued its agreement with the U.S.S.R.
Polish industrial goods, iron, textiles, etc., will be taken by Iran, through
a clearing agrE-ement, in payment for cotton shipments.

The Polish Ministry of Industry and Commerce promulgated an order in
July obliging cotton yarn spinning mills to use an admixture of "kotonine" 2/
at the rate of approximately 200 tons per month (922 bales of 478 pounds)
beginning August 1, 1939. It is believed that the quota for 1939 will be in-
creased to a fixed quantity as high as 400 tons each month.


2 A new term, meaning, it is assumed, staple fiber.


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Czechoslovakia '

No clear picture of the cotton situation in Czc-choslovaki'has
been obtained for November owing to the uncertainties which have'prevailed
through most of the month in the affairs of the countr.y. Internally
the irajor preoccupation necessarily has been with the reconJtitution
of the republic and the restoration of normal economic activity in the
new state. Not until after the middle of the month were the frontiers
finally defined and only at the end of the month was it possible to
elect a president.

The procurement of raw cotton, hc-v.ver, has been e'd'rably
facilitated by tle reestab? iahnment of tr?:'fic arrangeruInts .-.th the
rail'oays of adjacent countries, .ind a 'ro"-ls.onrj cu sorns-union with the
Sud..-an arreas has been cf LaaL'urn.ble acsiL.rta-ce to a continuianxce of
activity' Although export business of cotton yarn rnid goods has been
unsettled, a fairly satisfactory home market trLde in cotton goods has
been reported.

The ultimate future of th, cotton industry is apparently not yet
determined. It urtpec'.rs nov:" -ch.at Czechoslovakia re.taiins some of its
more modern cottr-o mills, ;.nd that of mil's of the old republic accustomed
to use eitlier E.;pt.in or indi.in cotton., tha gr,-ater part is in the
ceded terr-torie.-. 'Ihus not.'-ithstanding the css of approximately one-half
of the spirdles :'cr:aE.,v included in thc ccuntr i total, the proportion
of the spindles ur-ia- American or .LiJ.miar types ray not have been reduced
more than about )C percent. The ta-!k of finding the nec-ss-ry dollar
exchangee with.w'zih to purchase ra'. cotton, however, is intensified
by t'.-.u 2lJst cc'plete joss of the country's former hosiery industry, which h
h-.d -een :-. ccusto-ied to do a large scale export business' vith the United
St'.-s z]x the UaTited i:ingdom. The solution of this pa-rticular problem
depends upon the success with which, under the new regime, it maybe
possible to stimulate exports in other lines.

Italy1 /

Reports indicate improvement during October in the situation of
the Italian.cotton trade awd industry, but the general feeli-g seemed
to be t,iat devclopmer.ts were not up to expectations entErtrined earlier
during the ,eari. uirthurmcre, the situ,..tion in IIovember appears to
hMve bern -cr.nsi',rabiy less favorable. Both dom,-stic exid foreign trade
in cott-n goods -.*,,re slow during most of iovember. INew regulations,
it is rrpoo-ted u:..y .ake it easier for manufacturers of domestic
textiles -.o obtain ncc-ssary supplies of raw cotton at lover prices than
they form:'-ly raid, but oth,--r regulations require such a mixture of
higher priced artificial fibers as to largely offset the reduction in the
price of cotton.


3/ Based in part upon information received from the American Consul
General at Milan.


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Stocks of cotton and textiles produced from high-priced fibers
with which the Italian market is reported to have been overloaded during
the greater part of the year appear to have been reduced considerably
during the late summer and early fall. While this is favorable to
increased replacement orders, salesmen more recently faced the necessity
of forcing upon a reluctant public only textiles made of mixtures of raw
cotton and artificial fibers and other cotton substitutes. This may,
at least in part, account for the restricted sales of cotton goods
during November.

The hnrLd-to-mouth buying of raw cotton by Italian manufacturers
is evidence of the uncertainty which exists regarding the sales possi-
bilities for Italian cotton products in the immediate future. October
and November deliveries on all contracts for raw cotton are reported as
having been made at a slightly lower rate than during the earlier months
of the year. The rate of importation of raw cotton 'vas believed to be
sufficient for the present rate of production, although stocks are
reported as having declined somewhat in recent months. Dealers appear
to expect no material improvement in imports during the next few months
in the ab: nce of a substantial change in the outlook for the sale of
cotton goods both at home and abroad.

Foreign markets for Italian cotton goods have declined and some
of thec which have recently absorbed large quantities of Italian goods
appeared unlikely to improve. It is difficult to see where other markets
are to be found to replace these although some gains ore reported to a
few areas.

New regulations have recently been issued concerning the distri-
bution of foreign exchange to Italian exporters of cotton goods. They
provide that the Cotton Institute (Institute Cotoniero) of Milan shall
have authority to distribute 75 percent of the total amount of foreign
exchange received from the sale abroad of Italian cotton goods, as
has been done during the past year and oore; but the amounts which the
exporters of these goods will be given by the Foreign Exchange Institute
will vary according to the value of the raw cotton contained in the goods
exported. Prior to this, exporters were given the full 75 percent of the
value of the exported goods, irrespective of the value of the cotton
contained therein. But hereafter the amount which they will receive
will depend upon the value of the raw cotton contained in the exported
goods. For example, under the new regulations exporters of low grade
cotton yamns, in which raw cotton represents a large percentage of
the value of the yarns will receive a larger percentage of the sales'
prices of the yarns in foreign exchange than will exporters of fine,
high-priced yarns. However, the difference between the total receipts
in foreign exchange from the sale of exported cotton goods controlled
by the Cotton Institute and that portion thereof whieh is actually
distributed to the exporters will be distributed periodically to all





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I-ar "r. ; .:iuf,.ctur'sc of cottor. Foods whether for doue;stic or foreign
tradc. Thc distribution of this "difference" will be in accordance
vith t1he size of business or --uuher of spindles in the factories,
or uponi soxie simjilar b-sisu. L.u-i!vj the p.LSt yeCL 2no provisiorl hns
been made "hereb-- ,.,--Lufactur;-rs of cotton goes solely for the
domestic trade could l.gall" obtain foreign e-change with which to
ippoot ra.v cotto-L.

Portugal

According to pd.:i.c. '.-civ-d in Lo--.do--, -. embargo has been
placed upon1 the ic:portLT Lor of r:.'. co'on. except that originating in
the Portuguese colonies, wvihec o:-odi.ctiona this year is expected to be
some 20,000 metric to.s, eql-i'L tc. i little u'ort than 90,000 Amcrican
bales. Total consumption of cot"..o". of all 1kir-d:; in Portugal in actual
bales, regardless of wight, is rc'jorted by the Intcrnational Cotton
Federation for the e w' erd.cc 5ul.- 31, to be S5 ,000 bales in 1939,
84,000 in 1937, -L'd 7".,OOO i.. iQ. Sor.Ve part of the increase of con-
sumption in tic 2 'earc*s ;.: .b r,'.trLbuted to incresA-d yarn exports
to those areas of Sp;..i-- cut. n.of by civil strife fro.i the mills of
Catalo.iia. Thc C-ov'i nnLrnt j, r-. por-ed to have g.^x.cteed gro'.-,rs fixed
prices above th.c. world 1.,'el', .:.d it is intc ded by the restriction
of competitive iujpots to pcccrplieh, insofar as possible, the consumption
of the colonial production i-i Portu.uese ills.

U. S. S. R.

A further increase in --he cottorn mill equip;D "It of the U. S. S. R.
has been r-ouncod by the racde delegation of t'.-t country in the United
Kingdom. Plar.s call for the installation of noel: spindles to the
number of 5,04,000 in thu current yIJfor, as cozpar.'.d v'ith 90,000 in 1937.
The number of spindles in Ru.3oi.i o: July 31, 193, -'no esti'nted by
the Intcrnationai Cotto. Fedjra.ion at 10,050,000, and the increase,
when accomplish.*d, vouio give tne country a total slightly in excess
of the Gen in tcta l before th. Austrians ausclhlu.cs. It is plamnod to
develop furth.--r tho textile industry in the Ukraine, one of the new
cotton regions, v'here cotton production is rn. ported to have- increased
from 9,300 tons (roughly oquivaimnt to 43,000 Anricao bales) a con-
parativw.ly few --ears ato to 'o:uj 30,CjO tons (equal to about 138,000
bales) in 1937.




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ORIENT: V/Cotton consumption exceptiona-.ly high in India,
unusually low in Chi:.a and Japan

Mill consumption of Inlian cotton in India during November is
tentatively estimated at 192,000 bales of -Lpp'oximately 478 ?ou-:ds, accord-
ing to the IHew York Cotton Exchange Ler',icc. This is about 3 percent
larger than a year earlier and the largest f-)r the iionth of November in
history. It was, ho.vever, smaller than either of the 3 preceding months
and 11 percent smaller than the record high reached in August. The estimated
820,000 equivalent bales of 478 pounds consumed :.urng the first 4 months
of the current season was about 8 percent larcr th--..n fn the corresponding
period last season and much larger than in any othar like period. It seems
quite likely that mill consumption in India during the remainder of the sea-
son will not continue as much above a year earlier as during the first 4
months of the season. But if consumption continues at th I Noveiber rate or
even at a considerably lower rate, the total for th-- year ending July 31,
1939, will exceed last season's record mill consur',tLion of all cotton which
is estimated at 28S7,O0CO bales.

The limited information available indicatcz that in lIovcmbcr cotton
consumption by Japaaose mills continued at a rat,: about the same as in the
first 3 months of the season. If so, mill c.-nsu.-.tion in I:ovcmbcr was
at least one-third less than in. Iovormb;-r lact year or the. y--car before and
the smallest for the month for several .'cars. ior the 4 months ended I:ovom-
bor, consumption by Japanese mills appears to have totaled a little less
than two-thirds as largo as the record higLh cnsum LioL during those months
last season. while e cons,-,iption dclin-d ccn.ijr3i:. y u.w'ring the last part
of last season, a continuation of the rat., of consumL.iption existing so far
this season would result in a total for the 'car c.idini- July 1939 at least
one-fourth loss than the 3,881,000 bar.les (-.p'roximately 470 )ounds) consumed
by mills in Japan last season,

With some decline in raw cotton, pricc. st Shan.hai in Ilovcmber,
yarn prices continued u-.usually high rulativ- to r,.w cotLon, giving manu-
facturers a good margin of profit. Col.:equc.itly, i._re mills wore opening
or preparing to open and mill consuz'"ticn T-ho.cd oL.- inc_.ease over the months
immediately precoding. For November, mill coi.sui".ption in China, including
Manchuria, is estimated at about 145,0.'0 balles, ecquivalent bales of 478
pounds not, compared with 135,000 to 140,000 bales in the preceding months
of the current season. As compared wv.ith the unusually low rate of mill
activity a year earlier, Chinese cotton mill zct-vity h1as shown a marked
increase so faxr thi; season. The anru.ual r:tc of rill ,-ors:u.:.1tion in the
first 4 months of the season probably averagedd t,;o to thr.c times as high
as from August to Nove:.ibcr last season when .-iill consumption w.as ;'.t an
exceptionally low level. Because of the ir-crcasdc. rat.- of consut-.tion dur-
ing the last part of last season, tihe, prcs.-,t an'.uil ratc of consumption

k/ Based largely u)on a rCadio0ra'i frorm the Bureau's shanj.,.i office,
including information furnished tha-: officLu by Aramrican Consul Mc Conaughy
at Osaka, Japan.




CS-26


- 13 -


is perhaps less than two-fifths greater than the estimated actual total
mill consumption in 1937-38 of 1,230,000 bales. The Nove.iber annual rate
of consumption was perhaps at least 1 million bales less than'the estimated
actual consu...ption in 1936-37 and the smallest with the exception of
1937-38 in more than a decade. It is not unlikely that the rate of mill
consumption w.ill increase still further in the months immediately ahead,
but not by the same extent as during the corresponding period last season.

SUPPLY, PRODUCTION, AJID ACREAGE

SUPPLY OF COrE.'BECIAL COTTON: Indicated world supply still
record high

The co;.iparatively small reduction in the December estimate of the
United States crop, together with a slightly (1-1/2 percent) downward revi-
sion in the estimated reduction of commercial production in foreign countries,
has reduced the estimated 1938-39 world supply of coe:aiercial cotton 40C0,000
bales or a little less than 1 percent during the past month. The total
world supply of coir.'ercial cotton, recently estimated by the IIew York Cotton
Exchange Service at 50,462,000 bales, is still larger than in any previous
season. While it is only 100,OCO bales larger than that of 1937-38, it is
one-fourth larger than the average for the preceding 0lo years.

The present estimate of the world supply of American cotton for the
1938-39 season is 25,502,000 running bales. This compares with an estimated
supply of 24,647,0OOC bales last season and the 10-year average of 21,560,000
bales. The current season's supply is the result of a comparatively small
domestic crop and a carry-over of American cotton at the beginning of the
season considerably larger than. in any previous season.
r
The recent downward revision in the estimated commercial production
of foreign cotton gives an indicated world supply of such cotton soi ou.'hat
smaller than in either of the two preceding seasons. The present estimate
of 24,960,000 bales, however, is 36 percent larger than the 10-year 1927-28 -
1936-37 average. Foreign production of coumcrcial cotton Is now estimated
as considerably smaller than th:t of either of the two preceding seasons,
but the third largest in history, and more than one-fourth larger than the
10-ycar average. This year is the first year since 1931 that foreign pro-
duction of co..eorcial cotton has shown any appreciable decline,

COTTON ACREAGE: 1938-39 world and foreign acreage reduced

How that the Indian Government's estimate of acreage planted to
cotton in India up to Decuembur 1 (which on the average constitutes more
than 90 percent of the total Indian cotton acreage) has been received, a
preliminary ostimatc of the 1938-39 foreign and world cotton acreage is now
being released. The total world acreage is placed at approximately
75,500,000 acres compared with 93,400,000 acres in the 1937-38 season. The
present estimate for the current season is the smallest world estimate
since 1934-35, although only slightly smaller than that of 1935-36. About
half of the decline of 17,900,000 acres in the world total is accounted
for by a reduction in the United States of 8,650,000 acres, the present






CS-26


UNIVERSITY OF FLORIDA
1IIDIIIIIIIIIIIIiHi1111111111i1
3 1262 08900 4153
:.- 7 ,.


- 14 X


estimate of the 1933-39 acreage in foreign countries is approximately
50,100,000 acres, This is 16 percent smaller than the record acreage of'-'
last season, now estimated at 5',400,000 acres, and the smallest in"4 -...
years

Much of the decline in the 1938-39 acreage outside the United State%
as compared with tihe preceding season is accounted for to a considerable- i.H
extent by the marked reduction in China. However, the estimated acreage .
in foreign countries, excluding China and Russia, shows a decline of about i
5-1/12 million acres, or 12 percent. '

These estimates together with revised estimates for earlier years
back to 1920-21 are included in the following table.


Cotton: Acrageo in specified areas, 1920-21 to 1933-39

: Foreign! countries World -------
Crop United :Total excluding: :Total excluding: -
ye&ar : Stcates : China and : Total : China and : Total
S: Russia : : Russia :.
1,OCO 1,000 1,000 1,000 '1,000
: acres acres acres acres acres


1920-21
1921-22
1922-23
1923-24
1924-25
1925-26
1926-27
1927-28
1928-29
1929-30
1930-31
1931-32
1932-33
1933-34
1934-35
1935-36
1936-37
1937-38
1938-39 /


34.403
23,678
31 361
35,550
39,501
449336
44 606
33,342
42,434
43,232
42,444
33,704
35,v91
29,333
26,366
27,640
30,02G
34,001
25,346


26,274
23,192
27,561
-30,348
34,914
36,550
32,311
31,777
35,115
34,596
33,027
32,497
30,470
34,926
36,769
40,743
41,412-
44,936
39,456


32,092
29,322
33,539
36,300
41,199
43,314
39,942
39,758
42,366
43', 168
43,006
43,396
42,609
46,717
48,634
51,320
54,082
59,399
50,144


6 60,6a2
51, 870
59,222
65,898
74,415
81,236
77,419
70.119
77,549
' 77,.28
75', 471
71,201
66,361
64,309
63,635
68,383
71,440
786,937
64,802


66,50oo
58,00
64,900
71,850
80,700
87,700oo
84,550
78,100
85,300
86,400oo
85 9450
82,100
78,500
76, 100
75,500
79,460
84,910
93,400
75,490


United States acrcsaeos comnpil d from reports of the Crop Reporting Board,
othCrs estimated very largely from data compiled from official publica-
tions ofiforeign Governments an-d from the International Institute of
Agricultur o,
Spreliminary.