The Cotton situation

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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 AGRICTULTUREZ
Barmia of Agrimtcultural Economics
Wlzhington
CS-34 August 29, 1939


THE COTTON S I TTAT I N


S'jn'Jary


The world, is expected to have a slightly smaller supply of cotton this

season than last, it was rbr.,orted. today by the Bureau of Agricultural Economics.

The 193S-59 surly was an all-time high record of 50,500,000 bales.

The Bureau said that although tho carry-over of American cotton is the

largest on rt.cor4, thb incri.ase this year ovtir lj.st in the oarry-over is expected

to be about offset by th- smaller 1q39 Ttitted Stti-.s crop. World carry-ovir of

foreign cotton is considerably sr.aalh.r than the hihi r-cord of a yar ago. It

set.ms likely, thr. Bureau said, that the 1939-40 foreign productionn may be some-

what smaller than last year's output.

The Bureau looks for a marK-id incr,.asei in UTnite.d St,..trV.s -xoorts of cotton
in coming months, contingent upon th6 lessening of noliticJt.nsion in Europe.

Exports this stlazon to dato have continued. t:xctr.tionally small dt-site the

marked gains immediatt.ly following inc-xu1uraticn of the Unitcd Statr.s- export sub-

sidy. But as innings from the 1939 cron-n ar; noi.w r.xceding curren-t require-

ments, from now on it will become l-:ss difficult for buyers to obtain sizable

lots of required qualities of cotton, the Burr-au zaid.

Domestic cotton mill consumption in Ju7y rind tha first half of August

continued at a rate 15 to 20 -oercent higher than a yiar tiearlier. For the 12

months ended July, domr.stic mills consum.-d 6,g60,000 bali,s, 19 percent more

than in 1937-38 and the fourth largest amount on r,.cord. Sales of unfinished.

cloth and yarn were anrarr:ntly com-narativi.ly smrl1 during tho first three weeks
-~ ', -Y



u1 ".. ,EPOSITORY'




CS-34


of August, but pricc.s wt'ru mostly .airtin.d or r.ven incri.pasud. This, together

with lo'e7r cotton prices, incr;... d Lianufacturc.r..' '..rgins.

Mill activity r. c7tt.-'n con.um,-ti-n i7-. for i.-n ccuntrics wt.rE apparently

w(.ll maintainL.d durinrr July :6-d. .rly Ai .ast. In Euro-c., hcwt.v,.r, activity was

based tc an i.xc'.otionrl y larger. di.gron. ,jr, rovorntint ord rs. In Groat Britain,

Fr,.nce, rm.d soM. of the smn:Ilc.r iurwopan .ountrius, cottoer :onsum-tion as well

as mill activityty is running at consider.-bly higher I.,.vls th:an a y>iar ago, In

Germny -,a, Italy, cotton w-inning ianrid wi.aving mills ccntinue.d quite, active but

arf, using larg-, quantities of raTc.n. sta,.l, fiber and other substitute naturial.

Cotton mill co:ns- mtion in Japan a.nd China corntli.uud about unchanged at 1,.vels

mntt.rially lowor than before the cutbro'k cf hestilitios in July 1937. In

India ccnsuimpticn continue, 2 at or n,-.ar r't.ord-brucakirn l,.vtls.


PRI CES

Dcme-stic oriacs dt.clicr., but romrdin above. August 19

ThV iVret -oric; orf g.73 cc.nts for Middling 7/S inch cr tton -t tho
10 markets on August 2b was t'-.h l.e.st pricf. r(.cti;Ld in tho c.arI;.ts for
more thn. 3 mr-n-hs. The Auuast 26 .rict. wis three-fourths cc;nt bf:lrw that of
July 26 ane svc.n-cichths cont blow the high poi-r't of thu 1935-39 season
reached on Jux,': 8 and July 10. D.s-iti. the ,ubs f-tii:l dt.clint; during the
past two or thrtu i.,ks, pricw., ii. th-. m',rL-:..ts rt.:.-:,ii .d b'V. thi avc-rage
prici, of 8.37 ci.nts for Au.uast last y.f-ar.

As indicated la-st month, it ,ms qititt. likeIly that a part of the r-cent
weakness in cotton prices h; bti.:n dut. tc th, fa'.a.ct that the 1939 crr'p is now
moving in considerable. volur,. T; to Auigust 16 :. trtal of 310,000 b-;,t.s of
the now crop had bc.:n -;inni.d. At this ratt. it s-rms likc.ly that by thi fnd
of Aufast something like 1 milli,-n b:les orob.-bly will hi.v,. bCt:n ginn.d.
Since the world consumption of Ama.ric,-ni c-ttonr during the lnst r.rnth cr two
has been around 00,C,00O to ?00,00 bu2es th,.r,. should be a substantial incrt-ase
in the stocks of "frbc.11 Anericn cotton on h-.nd *%t th,. nd of Au-ust as com-
arc.d. with a irorth i.arliir. Quit, a l1.rge. incrst. in such stocks h-.uld.
occur during St-ptt.mbor, assuxning that little. 'r ronf; of thi .innings got.s
into Govt rn-int-loan stocks. As thcs.. stocks incr(;;Lse it be.cores much i.asier


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Cs-34


for merchants to fill orders for a given number of bales of a particular
quality than was the case when such stockss were as low in relation to re-
quirements as in the mast Sr.vt'ral wteks.

The incr.asbd tension-in Europe'. also probably has beobn a prict.-
detressing factor. Should a major war break out, the, 'export mnovwmont of
cotton from the Unit .d States and most other important e.xnorting countries
probably would be m, terially disruptE.d. Furthermore, the British pound
dfc.clinE.d from $4.68 to $4.28. bi.twoen August 24 and August 2$. This has been
a dnpri.ssiv9 factor on cotton prict:s in thE United States and othpr t.xport-
ing countries where the --.xchangt. rates have similarly changed, bu.t tends
to raise, cotton pricr-s in GreLat Britanin in p.nce. Th, decline in the value
of the British pound, however, tonds to lowcr Liv.rpool prices when converted
to cent oquivale.nts.


American cotton at Liverpool still high in.relation to
most foreign rowths .

From July 27 when the. cotton Ex',-,ort paymrent plan went into *-ffCct to
August 25 prict.s of Ame.rican cotton both in domestic markt.ts and at Liverpool
(and also probably in other markr.ts) have. df.clin,.d somc.what. InLivt.rpool,
howt.vi.r, the dt.cline was li.ss than that in United States markets, (So.t; table 1).
This reflects the somewhat greater shortragti of stocks of Ameiricah cotton at
LivE rpDool (298,000 bal.s on AuWust I this yitar as comnoareid with 686,000 bales
a yi.ar earlier) which has not y.t bt.n r.litvw.d by arrivals out of the 1939
crop. The small stocks of Americaun cotton have.. no doubt prt-v.nted Liverpool
spot prices of Amir.rican cotton from declining more in rE.lation to so-not prices
of fore-ign growths. As mnyi bi; s.,.n from th -ac.companying table, thE, prices
of American cotton arc. stil-1 comi.:)rativ.ly high relative to prices of foreign
growths, although not nearly to th& same extent as bt;fore the export subsidy
proposal was first r-commendc.d by the Pr,.side'nt in late March.


SEXTORTS

United Statos i'.xports 59 u-rcant l.ss than
tht, 10-yc:ar 19235-352 average

The 3,327,000 running balf,s of A-ierican cotton exT:ortc:d during the
12 months e.ndod July 1939 w,-.r only 59 percent of the comparatively small
exports of the rir,:ct.din, season and 42 perc(.nt of the! avi.rxgt. for the 10
years endc.d July 1933. This was the smallest, by a considerable margin,
than for any corrussonding 12 months since exnorts in running bales wt.rc. first
renort,-d in 1S97-S8. In trrns of 500-pound bales, the total.for thu past
se:.ison amounte-d to 3,513,000 balc.s and wi s the smallest since 1881-82, or in
57 years.




cs-34


Table 1.- Cctton: Spot price ner pounds, specified growths at Liverpool
and New Crleans, specified ne-riods

S ____ Liver2pool O:e Q
Aknerican : Indian Egy ptian i Brazilian : Amirican
Season Mid-Fine Comral:F.G.F. Uproers:FairSao Palo: Middling 7/15 In.
month : : a : A a :As a% : Sn-rtba
or day :riling :ow. aAsa
or dayg : Mid : Ac- :of Am-_ Ac- *o Ac- :of Am- : Ac- :Liverpool
Sinch dling :tuaj :ican:tual : :tual ricrin tual :over Nw
nch ___ Mi". M__.__Mid- Orl.ana _


10 yr. av
1927-28
to 36-37

1936-37
1937-38
1L938-39

193g-39
Ft.b.
March
April
May
June
July

Jily, *7
14
21
28
Aug. 4
11
s18
25


SCA ts Cc nts Ctnts gbrcr.nt C nts Perct;nt Cents Pt.rct.nt Cents


144.50

14.62
10.31
10.15


10.02
o10;17
9.67
10.55
11.04
10.61

lo.'94
10.77
10.20
10.53
10.30
10.18
10.02
10.25


13.60 11.19


13.16
8.78
8.71


8.55
8.71
8.21
8,97
9.38
8.. 95

9.28
9, 11
8. 54
*8.87
8.64
8.52
8.37
8.67


10.87.
1G. 87T,
7.96
7.14


6,95
6.85
7.02
7? 45
7.61
7.T31

7,57
7,28
7.10
7.33
7.27
7.29
7.37
7.67


78,0 17.12


74.
77.1
70.4


69,4
67.4
72.6
70.6
68.9
68.9

69.2
67.6
69.6
69. 6
70.6
71.6
73.6
74.8


17.40
13.10
11.80


11.56
11.58
10.90
11.08
11.47
11.43

11.68
11.53
11.18
11.37
11.47
11.27
11.10
11.66


117.9

119,0
126.7
116.5


115.4
113.8
112.7
105.0
103.9
107.7

o106.8
107.1
109.
108.0
111.4
110.7
110.8
113.8


CU.nta


14.os 97.7 12.65 1.95


14.12
10.19.
9.63


9.53
9.68
9.19
9.83
10.18
9.85

io.i6
9.99
9.42
9.85
9.52
9.40
9.24
9.42


96.6
98.7
94.9


95.1
95.2
95.0
93.2
92.2
92.8

92.9
92.8
92.4
93.5
92.4
92.3
92.2
91.9


12, 79
8.79
8.73


s.6o
6.69
8.61
9.30
9.45
9.37

9.55
9.45
9.15
9.35
9.21
9.01
8.92
8.76


1,83
1.52
1.42


1.42
1.4s
i.o6
1.25
1.59
1.24

1.39
1.32
1,05
1.18
1.09
1.17
1.10
1.49


9ompili.d from rr;norts of the Liverpool Cotton Exchangeo except for the last 3
wetks which ar. from cablE.-s to the Bur.-.au of Agricultural Economics or from
reports of thc Nthw7 York Cotton Exchange. Prics wert. rt.poort.d in ponce per
pound ;:nd convrt,.d to cents oer -ound at current rates of exchange.


*
*
*
*
*








July exports vert. about half as largi. as a year c.arlit.r and the
st.cond smallest since, 1911. During the first two w.c,;ks fol-wing the
inauguration of the. t.x ,crt subsidy, domestic *.xnorts incrt.ast.d about 100
percent.ov:r the. grv..tly re0strictt.d trxorts cf t-h. two pre.ci;ding Wt.t.ks,
but we.re. still. slightly l'ss than in the; corres.-onrlin. wt.t.ks of a y".ar
earlier. From August 1 to 23, a total of 160,000 bals E".s txportt.d
compart.d with thi, r,.lativoly small t-x-orts of 173,I00') bale.s a ytar i.arlic.r.
The comparativ, ly small ;x-,orts during this ncriod, despite thi, t.x 'ort pay-
imi.nt program, art. app;.rc-ntly attributable. to the small stocks of "free"
American cotton available, whichh ha, m;:-d. it difficult to ass-.nblE sizable
lots of particular u-Jliti&s of cotton for ,xpcrt. E.-nort saltss of Amferican
cotton to date. bclit.ved to havr. bi.r.n fairly I-irrc.. Should thi, political
tension in Eurc-o br.c)-it. loss sivt;re, it is x,,r'-ctt.d that ex-rorts will show
a substantial incrr.ase. c.vcr the very low lc.vwls of last sitason during the
wfieks and months immcdiatily rnhe.d as larfC.r quantities of thie current crop
bk.com ', av.ail abl i..


Exports from Eg;rt, an1 BrriZl actnttion;J1_ l:rro

ExRo-rts of Egyptian cotton during the 12 months nidod July, while
slightly l.Es than in the two -pr.c.dCin.;- s,,--sons, wi.ri one-fifth larger than
thf, avuragt for the. 10 yt.crs c.ndtd July 1933. They were the fourth largest
for any corresponding 12 months on ri.cord. Ex orts of cotton from Brazil
in the 11 months 6ndbd June -'ere cni-thiri l:;-rg,.r th:mn tht. previous r,.cord
high ex-orts for tht.sc. months and 15-1/2 times as lir;u as the. awvr.t; for
th&se months in the :ibovu-me.ntion6d lC-,-yar period. cxnorts of cotton from
India w-.rE, 55 nerc!.nt l.-.rgt'r than during tht 11 months endo;d June 1939 than
in the corrtsrcvding -foriocd a yt.ar c.arli,.r, but about the. somi. zs the avt.rago
for the. c-rres-.,:ndin- nfricd during the 10 y,.ars 1923-24 to 1932-33.

DENIAID AND CUNSUITION

UNITED STATES: M4ill activity continues at lhw.Vls

DomE.stic mill consumption of 521,000 bales for the month of July was
73,000 balis cr 17 perct.nt larger than in July last yt-ar. It brcu'vht the total
for thi season to 6,s60,000 bcals which was 19 percent laror than in the
1937-3S sc.:-Ason ar.d the third l:argr.st on rt:ccrd. Trad.. reports inicatE. that
mill activity during thc first thr:.- wc.tks of August, %-h*n adjustt-d for s,.asonal
variation, wi,.s .qual to or higher than the avtr.,7; for July.

Sal, s of unfinished c1oth and -Tarn w.rx arnarently comparatively small
during thiE; first threat wi.e.ks of August, falling considerably bullow output. Cloth
prices, how,.ver, wtre mostly m-,intain.d or s.ow7,.d s,:mi incrc..i.se. This to.t.ther
with the dt.cline in cotton rrict.s incre.as,.d the manr.ufacturing m;ar-ins ancng such
goods. The ccrnmarativw.ly favorable lt.vEcl of retail sales and ri.norts to the
f.ffect that stocks of cotton goods in rc.tiil channels aro favorable. to a con-
tinued high ratio. of domestic mill activity and cotton consuLmnotion during the
inmediat6 future. Uns(.ttlud conditions in Surone, howt.vor, might prevent con-
ditions from dtv,.loping as favorably as would othi.rwisi, bt. the cast.


-5-




COS-3 4


EUROPE: I/ Mill activity continues high en strength of Government orders
July, the last month of the 193!-39 cotton season, brought no change
in the improved position of the 3hiopean cotton textile industry. Mainly
as a result of the armrient nrcgrrx.Ts, with;i their gnnerntion of buying power
and secondary eirp c meantt industria'.l production .An mai:; Ejropean countries
continues on the v.pgrae and unemployAnent figar..s are being further reduced,
Those developments, apa:-t from direct -vornnmont orders for cotton textiles,
have stimulated domestic consumer a-nd wholesale demand for fabrics and yarn.
Except for disturbing condition grfowinr out oi the extreme political tension
since the middle of August and the disruptions which might accompany a
major war, the present outlook for mill activity in the next several months
to come seems to be favorable.

Spinning -nd weaving mill activity in Western and Northern Europe,
including the Unit.i! Kingdom and France continued sustained or even on
the increase dur.rg July and evrly'Augurt which is unusual for this time
of the season. The fine spinning section seems to be -,,rticlarly favored.
The cottonA textile indu-try of Germany a3 o continued active, to a large
extent, however, using substitute material1 in the place of raw cotton.
These materials, such as cell-wool, reclaimed cotton and waste, have by
now also replaced P cct...-derable share of the former consumption of raw
cotton by the Austrian .ind Sudetenland spinning mills. Since July 1 cotton
consumption in Gerr,-.any has probably declined somewhat as a result of the
recent decree prohibiting the utilization of cotton in the manufacture of
a great variety of textiles.

Cotton mill activity in It.-,ly during July and the first half of August
appears to have maintained previous improvement rzid to exceed the reduced
level of operations at this time last yecr. As to the other European coun-
tries, activity in spinning and weaving seems on the whole to hare shown
comparatively little net change from May rind June.

UITED KIGDC?4CM

During Jul-. activity of 'both spinning .-nd -weaving mills in Great
Britain was maintained at about SO r.'rcer.t r:f rncrmno., which was much higher
th.-n a ycar earlier. Domestic textile d..n.2-r.d throughout July was reported
healthy, as a roesulIt of rising gsr-.rU.l industrial activity. Sub stantial
goverrn.2nt orders pro-rided oan additional stimulus to the industry and
order books were r.."ported well-filled for sever.,! months to come. Export
business, on the other hand, continued restricted.

On Au-ust 1 the Egyptinn Minister of Finr-nce announced that an agree-
ment is now being negotiated between Britpin r.nd Egypt whereby cotton 2/

l/ Baaed largely on a r-,port from the office of the A.ricultural Attache,.
London, England, d.-,ted Akgust 9, 1939.
2/ 200,000 bales hve been mcntioned by the press in a conj-ctural manner.


- 6 -





CS-34


-7-


is to be bartered for British arms and. ammunitions. The possibility of some
other international deals of the Anglo-American cotton-rubber type in-
volving raw cotton also has been widely discussed. The cotton barter with
Egypt now envisaged is expected to provide that the cotton should be stored
in Britain, as a reserve, for a period of 5 years.

One of the outstanding developments in 1938-39 with respect to the
cotton situation in Great Britain was the extremely large reduction in un-
manufactured stocks. At the beginning of the season port stocks at
Liverpool and Manchester amounted to 1,173,000 bales but at the end of the
season totaled only 629,000 bales. Stocks of American cotton declined from
696,000 bales to 169,000 bales.

FRANCE V

Conditions in the French cotton textile industry during the month
of July continued to be fairly satisfactory, both as regards mill activity
in spinning as well as weaving. Sales of cotton yarn during the month were
generally reported quiet, but the offtnke in fabrics was fairly active in
the second half of the month following a period of stagnation in the first
half. Government orders play an important part in present mill business
and activity. Relief was generally felt at the announcement of the flat
rate export subsidy on United States cotton, and toward the end of the month
renewed interest by brokers in raw cotton was reported. Heavy spinner
demand for American is anticipated after the August vacation period. So
far, however, operations in the raw cotton market have not been on a parti-
cularly extensive scale.

As compared to the reported increase in activity of the cotton mills
this past season against that of 1937-38, raw cotton imports in 1938-39
lagged considerably behind imports in 1937-38, the decline being most pro-
nounced in the case of American cotton. Regarding exotic growths, notably
Brazilian, imports have been on a much larger scale than in 1937-38. With-
drawals by spinners, as a result of the higher -ctivity, were almost 15
percent above 1937-38, with less American cotton used and a formidable in-
crease reported for other cottons, notably Brazilian. As a result of these
divergent movements in imports and withdrawals, Havre stocks at the end of
the season have been reduced to about one-third of what they were at the
beginning.

BELGIUM

For the most part the Belgian cotton mill situation continues un-
favorable, with mill sales mostly short of current output. For short periods
during the recent past, however, cotton spinning mills are reported to have
registered a good volume of new business though still' at hardly remunera-
tive prices.


3/ Partly based on information received from the American Consulates at
Lille (Nord), France, and Ie Havre, France.





OS-34


According to the latest quarterly report of the Association Beige
de Filateurs de Coton, the producing capacity of the Belgian cotton in-
dustry is now no longer, balanced with its sales capacity, in view of the
loss of several important export markets. On the basis of strictly private
initiative by a group of manufacturers, several cotton weaving mills have
been purchased in order to destroy the machinery or to sell it on condi-
tion that buyers would destroy nI equivalent quantity.

GERMANY

The German cotton textile situation continues to be characterized
by high mill activity, but scarcity of raw material supplies in relation
to requirements. Following a season of building up raw cotton supplies at
Bremen during 1937-38, stocks in that port were again depleted during
1938-39. Stocks of American Dotton at Bremen on July 31 this year were
reported at 7147,000 bales compared with 245,000 bales a year earlier. Stocks
of American totaled 79,000 bales against 146,000 a year earlier.

Cotton mill activity, according to the official index, in 1938-39
showed some increase over 1937-38. Imported supplies of raw cotton, cotton
waste and regenerated cotton also showed an increase compared to 1937-38,
though it is not clear to what extent imports for Austria and the Sudeten-
land were included in the official trade returns. Raw cotton imports in
193S-39 by Greater Germ-.ny were probably well below the 1937-38 takings by
Germany, Austria and the Sudeten mills combined. Larger supplies from the
still increasing production of cell-wool have been further substituted for
raw cotton.

Bohemia and Moravia In the Protectorate of Bohemia and Moravia
cotton textile mill activity was also on the increase in recent months and
unemployment was further reduced. There is no basis for comparing present
cotton output with previous years, since the statistics were formerly not
given separately for the territory of the present Protectorate. A con-
siderable reorientation of the industry seems to be taking place and the
share of substitute materials used in the spinning industry will necessarily
increase with increasing difficulty in obtaining raw cotton supplies.

ITALY W

Avery satisfactory situation was reported in the Italian cotton
-rade..an&A-nuixstry during July. The mills appear to have been operating
at ordinary capacity and renewed interest in cotton buying followed the
settlement of the question of nn export subsidy on American cotton. Current
orders for cotton goods upon which the mills are now running have come
from both domestic and foreign markets. Orders on hand are said to ex-
tend quite as far into the future as the operators are willing to go under
present uncertain international relations and the rising tendency of costs
of production in Italy. It is reported difficult to place orders for cotton

4 Information received from the American Consulate General at Milan.


- 9 -




CS-34


-9-


goods for delivery during the current year, while the mills are also said.
to have substantial backlog orders, among them large commissions for Army
and Navy materials. ""

Italian cotton mills are reported in the latest official statistics
to have been more active in May, 1939, than in any month since Januaryl935,
with corresponding increases in employment and the consumption of cotton
and other fibers. The proportion of raw cotton used, however, continues to
show a decline in comparison with the use of artificial fibers and other
materials that are now being used so extensively by the Italian cotton
textile mills in making goods for Italian consumption. Imports of cotton
during the first half of 1939- were 35 percent smaller and 40 percent less
valuable than in the same period of 1938.

Export markets for Italian cotton yarns continued to expand with in-
creased shipments to Yugoslavia, Rumania, and Spain. During the first
6 months of 1939 exports of cotton yarn were g2 percent larger than those
during the first 6 months of 1938. Exports of cotton fabric during the
first 6 months of 1939, on the other hand, were about 10 percent below the
corresponding period of 1938, with decreases largest in the case of Argentina
and Egypt, but a'substantial increase in shipments to Turkey.

Substantial orders for American cotton were placed by Italian buyers
soon after the announcement of the United States export subsidy. Most
orders were for fall and winter delivery, although some spinners seemed to
be covering their needs for the first half of 1940 as well. The tense inter-
national political situation, however, is thought to be a factor tending to
prevent extensive commitments too far ahead.

Italian dealers in late July appeared to reg-rd the market outlook as
favorable, although they did not expect the amount of business to equal that
of a few years ago, owing to the increasing use of substitute fibers in
Italy. By the end of this year, all so-called cotton goods offered for sale
for domestic consumption must contain at least 20 percent of substitute
fibers, so that yarns and fabrics now being manufactured for next winter
and spring sales must contain a smaller percentage of cotton than has ever
been the case heretofore.

Around the end of July another quota for some Lire 25 million,
or some 20,000 bales of raw cotton at current price levels, was placed at
the disposal of producers of cotton moods for internal consumption.
Present prico' r1-*'tionships are considered to frvor American cotton by a
wide marm r- a--d r.u'ih of the quota allotment will probably be used to pay
for imac r. -'.c -Lly ,Imnde or for cotton now lying, in Italian free ports,
chiefly r

.--,w (rtton imports continued considerably below 1938, with total
imports 'i Lie first half of 1939 amounting to 56,224 metric tons or theequiva-
lent of 25.i7" boies of 478 pounds compared to an importation of 86,769 metric
tons or 400,190 bales in the corresponding period of 1938- Most of the




CS-34


decline was accounted for by smaller takings from the United States. How-
ever, takings from Egypt and India as well as Turkey also showed redue-
tions, while imports of Brazilian, other South American and Sudan cottons
increased appreciably. How long the curtailment of total raw cotton im-
ports can be maintained is still a question. Some spinners are known still
to have considerable stocks, but there is no doubt that the margin has been
reduced materially during the past 6 months and it seems probable that larger
imports of raw cotton will soon be necessary.

Cotton mill activity in the spinning and weaving sectors during May,
the latest month for which statistics are available, was considerably
higher than either a. month or a year earlier, and employment as well as
raw material consumption were raised accordingly. The share of substitute
materials in spinning mill consumption, however, is now considerably-above
a year ago; raw cotton in May 1939 comprised only 60 percent of all fibers
spun into yarns compared to 73 percent in May 1938.

SPAIN

With at least a yearIs supply of raw cotton assured as a result of
the recently announced purchase on. a credit basis of 250,000 bales of .
American raw cotton and an additional purchase of Egyptian cotton, Catalonia
is now looking forward to a period of considerable cotton mill activity.
Greit efforts had been made previously to get the mills going. Though
the machinery capacity of the industry is somewhat reduced as a result of
the War, the mrnin unsolved problem up until the recent purchases were made
was the raw material question. Now thlt it is satisfactorily settled cotton
mill activity is expected soon to return to normal. Consumer supplies of
cotton goods have been low for 2 years past and the War has exhausted all
reserves. A backlog of most essential requirements is therefore to be filled
by the industry.

SWEDEN

The report of the Swedish cotton industry association for the second
quarter of 1939 indicates that most of the cotton mills have been running
full time.

ESTONIA

As a result of a recent decree with respect to emergency reserves
of raw materials and semi-manufactures it is expected that Estonias 1aim-
ports and mill consumption of cotton during the third quarter of 1939 may sho
a significant increase. An ordinance has been issued recently by the Govern-
ment to the effect that within 3 months from the first of July enterprises
should accumulate emergency reserves in regard to a great number of products
including raw cotton, cotton yarn and cotton fabrics. Importers and in-
dustrialists should accumulate reserves to the extent of up to 50 percent of
their yearly turnover or requirements, wholesalers a minimum of 20 percent
and retailers a minimum of 10 percent. Import duty on these stocks will
not be oid until they are consumed.


. 10-




cs-34


ORIENT: Consumption continues low in Japan and China, high in India

The indications are that cotton mill consumption in Japan during
July remained near the level of the precedirng several months but much
lower than the average for July, for the prnceding 5 ye-'.rs. In June the
215,000 bales (of L7 por.lnds no-t wei.;ht) cf cott,'n con:1.--2d by member
mills of the Janan Cotton Spin-ers Associ"tion v.ro within 9 percent of
consumption in cpch of thc pr.'cdir::; 12 roiiths, bu:t wyor,, 26 pcrc.-,nt below
the 5-year, 1933-337, J1-.:u, average. T'he consumption cstimiate for July is
expected to m.ake a somcwjha-t simil-r shorrin,. For the 12 m-onths ended July,
consumption by these raills prohLoly total.o-l. sli.. .tl. oor 2, C.0,000 bales,
a decline of 24 -orceozt below 1937-35. This fi -.-- is !1x.nLut on.-third less
than that of 1936-37, the lhst y pr prior to the ou.tbr,.--k of hostilities in
China and is the smileost in S y.-,ars.

Proi-iLction of puro-cotton yan. ajounting to 221,000 bales of 400
pounds in Juno ras 4 percent below thit of the previous month. The decrease
for the II mcnths c'-dod June wo.s 19 percent. This drop was attributed to
the rapid accumulation of stocl"s of pi"ce j;ois cud by r eclinina exports
of textiles an-d bby restriction. .aiinzt Japr.-.mce conuVr-frtion of pure-cotton
goods.

Cloth exports during June no,'mtod to 2Sl,200,000 squire yards, a re-
duction of lg percent from exports in Miy. From August through June, cloth
exports showed a decline of 8 percent cornr.red with a year carlicr. Piece-
goods stocks in wrehouscs combined with mnrufactur.rs1 stocks: were report-
ed as equivalent to about a 4-nmo:ths' supply for export instc;d of the usual
3-months' supply. It is reported th-t GCovernment officia.s are concerned
with these heavy cloth stocks '-nd that un effort has been made to further
discourage imports of cotton for the present.

July mill conrumA)tion of cotter, in China, i-c.ludin. 1qX-.c-.ria, is
estimated at 140,000 bales according to a recent radio:rrain from the American
Consulate at S-".n4hai. This is apparently riot greatly different from con-
sumption durian; rccc'.t months. ConsLmption for the 12 months ended July was
materially lr.-rger th.nr. th t of 1937-3,, but '-oob-bly less than half as large
as 1936-37.

Mill activity in Shnng!hai, Tsin.tao, o-.d Tientsin wrs curtailed from
5 to 10 percent during July and A-iart, while in oth-r parts of China activity
increased.

The 245,000-bale (of 400 pounds net weight) cons.nr'.tiorn. of Indi-nr
cotton by Indi-n mills in July was slightly less than the consumption in July
last year, but, with th.-.t cxcaption, the largest for the rionth on record. It
was 12 percent larger than the average July consumption for the 5 years 1933-37-
Consu1ption for the entire season is estinr.tec. at 3,090,000 bales according
to the New York Cotton Exchange Service. This is sli htl;, l-g -:r than the
previous record hii cOnsunption ostablishod in 1937-3' and considerably high-
er thrn in any other season on record. It was 23 percent larger than the
5-year 1932-33 to 1936-37 average, oven though since 1936-37 the consumption
estimates do not include Buarma.


- 11 -




- 12-


ACLAFGE, PRODUTJOTION, STOCKS, AI' SUPPLY

Sun-oly of An.orican cottorL about untchun.d,
dcesrite record hL.h cr.ry-ovor

The world c' -.', r of Ak'ri 'C" ,ittc:-. on Agut 1, 1939 is
tentatively placed. at l4,l150,0U b-al- acc'rdUi> to c' t-.'.t..s of the New
York Cotton S:cL-:o S, r-ico. This is a little )vcr :),Q,00 bales larger
than the previous record high carry- )7cr muov rmore than twice -.s large as
the .v-r-'re for the 10 y.a.rs c-..Ci 1933. On th'ic basis of the August Crop
Report, the 1939 poiuc'.r.n of A.-:'i-n cotton is c-0cnct-d to be about
500,000 b-.les s:'0.or0 thaZ 'V cf 1-.,k. Sue:. ea crop, t'joth'ir with the
carry-over as nov.' osti:.at,3., would. ." -'c a supply of A..-.ric., cotton for the
1939-40 seoazon just sli>-.tly s.-.llr.r the-r. the 25,'.,5,C.0 r-mrirng-balo supply
of 1939-39, A supply cuch a' now .-stir3:itod. wouil. be only 3 percent loss
than the rcrd. hirh IS22-33 supply of Ak.iorica cotton .-d. aoioot one-fourth
larger thin the 10-yar 1923-21 to 1932-"3 v'ro A tlitod Sta-tes crop
cf ll,412,000 balor, of 500 pounds gr^ s wvcight (Tppro,:i:r.toly I.7 pounds net
weight) D-3 forecast b. the Cr--p RTportir:ng /r on the baois of conJitions
as of A--ki.,t 1. T'.is fi "are is 531,000 b,.-s l. s- than the 193E crop ond
the third r. *lest in l5 yo-ars. This fo:-cc -.st is based on .'-X in.icateAd
United State s yield per n.cro of 223,7 po1L-u1s. In 1938 the avxre yield
was 23'5. potunis ".ed in the 10 yeo.rs 1928-37, 190.8 pniundts. The cotton
acrcocn of 24,_24,00,0 acros used. in nnkinC this f-,'rec..st was the cstnimated.
acr-a.C: in cultivation on July 1, losS the 10-y.r -Lvc.ra.,o abaidonnent. This
figure is slic-htly more than the acree wa-'vcsted i. 193w vhich was the
smallest since 1I99. i

Supply of foroif cotton Ecxeectol to _in ,--clino

The ewti"ated world c.rrover of foroii;-:3,,n c..:rcial cotton as
of Aurst 1, 1939 vns a little rn-orc than a nillin bales .:-,l],r than the
record iLh cn. -rz--.-:r of a year coirlier. Tl'is, togcther ;.ith the possibility
of sone decline in the 1939-0 production of forci;n-k-r-;,nv cotton, mrkes it
seen quite likely that the supply of such c,.tton would be c.-nsirderably smaller
thorn thn.t of 193:-39s A C.ecli.ne this S.a-,on -o7T-Jl--1. :.iJ: the second consocu-
tiveo season in which the suply of froi.,. cotton so'.vd. a decline aiter hav-
in, increas-; for S consecutive years, 131-32 to 1937-3g. A.-y decline which
nay occur in the :.ajons supply TIvill no soubt still lc.vo the supply much
larve. thlen in any .'ar prior to 1V36-37.

As indicated. last nonth, cotton acr,:a.-'s in ..rpt an'1 China wore re-
ported. to be considerably smaller than in 193g. A recent report front the
Aneric-!n Consulate at Sv'.,zhai indicated that pnrr'..7..ction in Chir-a for 1939
night total about 1,900,OCO bales of 1.7g poun.i-. This r'-prcse.nts a decline
of .C,0,000 bales below the estimate of the 193. crop. The .area plo nted to
cotton in India up to Aa.,ust 1 was recently estin.tod by the In-inn Govorn-
r2ont at 13,713,000 acres. This is appro:xian.tely 2 millionn v.cr.s or 13 per-
cent less th'-.n the r.cron,:e plritoi to the s.-ao c-te lasst ycar.


CS-34




-13 -


INCOME FKOM COTT01: AITD COTTONSEED

In the preliminary estimates of thi cash farm income from the sale of
farm products made annually at this tine of year, the Burcrxu has estinmted
that farm income fror. cotton and cottonseed for the 1939 calendar year seems
likely to total around $525,000,000. This is $142,000,00 loss than the esti-
mate for 1938 and the smallest since 1912. (See table 2.) The sale of cotton
in 1939 is expected to be substantially s-mallcr than in 1938 both because of
the smaller 1939 crop and because a subst.intial part of the record crop of 1937
was carri.-ed over and sold or placed under Government lo.n in 1938, whereas
nearly all of the 1938 crop had been sold or placed undcr loan before the end
of the calonda%.- year.

Table 2.-Sales and cash income from cotton and from cottonseed, United


States, 1910-39


S Cotton


Sales

S1,000
:balcs 1/
: 11,203
: 14,834
: 14,130
: 13,977
: 12,565
: 14,S31
S12,224
: 11,113
: 10,212
: 12, 699


U






U



S
U


10,754
11,426
10,214
10,338
12,761
15,296
16,4o4
15,058
14,516
15,650

14,025
14,81Q
13,796
12,276
12, 299
10,347
12,562
17,540
14,176


:Av2erage :


: price :
: por lb.:


Cents
13.9
10*5
10.9
12.5
8.4
9.5
15.6
24.4
29.7
32.1

25.4
13.5
20.8
28.0
23.9
20.9
13.3
17.9
18.1
17.4

10.4
6.1
6.1
s.6
12.3
11.2
12.2
g.8
8.1


1 500-poiuid gross weight
SPreliminary. 3. Ton


Cottonseed


Cash :
income


1,000
dollars
7 1,289
779,375
772,456
870,294
524,869
707,025
955,476
1,354,613
1,515,654
2,038,231

1,366,652
769,505
1,060,544
1,447,669
1,523,055
1,601,169
1,094,508
1,346,690
1,294,224
1,363,007

726,911
455,342
4l8,514
528,d38
75C,523
608,328
763,360
770,377
575,741


Sales


1, 000
tons
3,805
4,302
':,376
4,4-o
5,,')52
4,259
4,286
7,914
4,112
3,b92

3,540
3,009
2,898
2,948
4,218
5, 026
5,709
4, 662
4,660
4,731

4,337
4,556
4,110
3,854
3,210
3,361
4 252
4: 242
4, 242


bales, approximately


tative estimated.


:Average :
: price :
: oper lb.:


Dollars
26.06
17.50
15.10
21.85
15.27
28.87
44.99
63.65
65.35
66.02

30.82
27.40
30.13
41.09
33.29
32.07
22.39
32.89
33.99
31.48

22.42
9.13
10.26
12.64
32.51 ,
30.78
33.23
19.86
21.57


Cash "
income


1, D0O
dollars
99,169
75,300
79,229
97,902
77,174
122,948
192,s34
249,118
268,S74
243,727

109 lo6
82,442
r7 330
121 133
14, 429
161 192
127 834
153 341
158 420
148 943

97,234
41,614
42,180
4'.,713
194,331
10,3458
141,519
113,399
91,494


Total
income


1,000
dollars
sso880,458
854,675
851,685
968,196
602,043
329,973
1,143,310
1,603,731
1,784,528
2,281,958

1,475,758
852,247
1 147,374
1 563,802
1 663,484
1,762,361
1, 222,342
l 500,031
1 452,644
1,511,950

824,145
496,956
460,694
577,551
362,854
711,786
904,879
883,776
667,235
2/ 525.000


478 pounds net weight.


Year


1910
1911
1912
1913
1914
1915
1916
1917
1918
1919

1920
1921
1922
1923
1924
1925
1926
1927
1928
1929

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
19- N


I




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