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
Publisher:
Economic Research Service, U. S. Dept. of Agriculture. ( Washington, D.C. )
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Resource Identifier:
aleph - 020142316
oclc - 01768374
System ID:
AA00013000:00051

Full Text
A54.,46 4b


UNITED STATES DEPARTMENT OF AGRICULTURE
BUREAU OF AGRICULTURAL ECONOMICS
WASHINGTON


CS-40


FEBRUARY 29, 1940


THE COTTON S I TUAT I ON
----------------- M----------------------- a-


COTTON CONSUMPTION AND INDUSTRIAL PRODUCTION
IN THE UNITED STATES, 1919-40
INDEX NUMBERS (1923-25=100 ), ADJUSTED FOR SEASONAL VARIATIO..
PERCENT--------------------------------


140 -------------------------

Cotton consumptionA

120 - ,' ..



100 -1,-
IAl
I II if








Industrial production I

60 ...


I 1923 1925 1927 1929 1931 1933 1935
DATA f-URNI:HZD BY BOARD OF GOVERNORS. FEDERAL RESERVE SYSTEM


U.S. DEPARTMENT OF AGRICULTURE


NEG 20570 BUREAU OF AGRICULTURAL ECONOMICS


INDEX NUMBERS OF COTTON MILL CONSUMPTION AND OF INDUSTRIAL
PRODUCTION TEND TO CHANGE TOGETHER. THIS TENDENCY IS DUE IN PART
TO THE RELATIVELY HEAVY WEIGHT GIVEN COTTON CONSUMPTION IN COMPUT-
ING THE INDEX OF INDUSTRIAL PRODUCTION, BUT THE MORE FUNDAMENTAL
REASON IS THAT BOTH INDEXES REFLECT CHANGES IN GENERAL ECONOMIC
CONDITIONS.
INDEX NUMBERS OF BOTH COTTON CONSUMPTION AND INDUSTRIAL PRO-
DUCTION REACHED RECORD HIGHS IN DECEMBER, THEN DECLINED MATERIALLY
IN JANUARY. RELATIVELY HIGH PRICES OF COMPETING PRODUCTS AND LARGE
SALES OF COTTON TEXTILES FOR EXPORT ALONG WITH THE HIGH LEVEL OF
INDUSTRIAL PRODUCTION LARGELY ACCOUNT FOR THE RECENT HIGH RATE OF
COTTON CONSUMPTION. ..





*' ', -;-- 'J ";'_-_,__





as-4o


THE CO TTO0T S I TUAT I ON


Surmary

Cotton mills in Great Britain, France, Italy, and a few other Euro-

pean countries continued relatively active during the past few weeks. In

the German-controlled ara of Central Europe, however, ths effort to conserve

the remaining small supplies of raw cotton has caused cotton mill consumption

to remain greatly restricted, and consumption of cotton for the production

of goods for non-military uses is exceptionally lor. In the United States,

consumption durin- February has continued high, but mill activity, adjusted

for seasonal variations, declinod sono/what.

In the Orient mill activity recently declined some-'hot in China and

Japan, But in India raill consurr.tion in Dtceiber ond J.nur-Lry was materially

higher than in November altho-au-h lower thl.n in th.. corr. snonding period last

season.

Sales of cotton textiles in Gr.at Britain, as well r.s in Holland,

Belgium, and a few other neutral countries, are reported to have been com-

priratively srw.ll in recent weeks. In Gree.t Britain this -'as duo in part to

unmcrtainties over the additional cotton control m.e :sur.s which were being

formulated and to high cotton textile prices, pTarticulrly. on export sales.

Exports of American cotton in J',nuary vwer? the lor.,*st for the month

since 1927. They were 3-- times as lIrr.-O as in Juinr.uary 19, so'nd aboiit -

larg.r than the 10-year (1929-. g) January average During thL first 3 weeks

of February, domestic exports continued from 2 to 31' times as large as in the

corre.ponding weeks last y.,ar. From August 1 through February 22, exports

were 2,200 thousand 'alus (90 percent) lar.:er than through the corresponding

date last season. More than 1,4OO thousand bales of this increase was in


- 2 -




cs-4o 3-

exports to Great Britain and France, Exports from Egypt in January were 13

percent larger than in January 1939. Indian exports in December, on the other

hand, were l/5 smaller than in December 1939 and exports from Brazil were

less than half as large as in December 193g.

Prices of spot cotton in the United States advanced more than 1/2 cent

during the past 4 week'. Liverpool prices of American cotton, on the- other

hand, declined about 1/3 cent per pound. As a result, the spread of American

Midl.ling at Liverpool over ITNw Orlians declined from 3-1/3 cents on January 26

to 2-1/2 cents on February 23. The spread at the present time is approxi-

mately the lowest since November and reflects a decline in transportation

costs during the past few.weeks. Liverpool prices of Indian cotton declined

somewhat further relative to Americarf during the past month, whereas prices

of Egyptian Uppers- and Brazilian Sao Paulo increased somewhat in relation to

American.
PRICES

Domestic prices recover substantial part of general decline

Since January 23 when Middling 7/g-inch in the 10 markets averaged
10l.16 cents, the lowest quotation for more than 6 weeks spot prices in do-
mestic markets have strengthened materially. By February 23 the 10-market
average was 10.74 cents, or 0.58 cent higher than a month earlier. With a
slight additional advance following the 23rd, the .average for February 1 to
26 inclusive was 10.61 cents, only 0.01 cent less than the January average.
The average for both January and February was higher than the average for any
other month since July 1937.

The strength in domestic cotton, prices during the last 4 weeks is appar-
ently accounted for in part by the continued high rate of domestic exports,
the high rate of domestic consumption, and the reduced rate at which growers
appear to have sold equities in the cotton under Government loan. Even with
a considerable decline in domestic consumotion during the next several weeks,
additional quantities of loon cotton are likely to be needed by the cotton
trade if exports are to aomroximate the quantity registered under the export
payment program. This is due to the fact that the end-of-season stocks of
"free" cotton can hardly be reduced below the low level of last year without
creating a real shortage of available cotton from which to obtain sizeable
lots of the qualities desired to meet current needs.

Prices at Liverpool decline, whereas domestic prices advance

Although spot prices in the United States advanced considerably during
the past 4 weeks, prices at Liverpool declined materially. On February 23






cs-4o


Table .-Cotton: Spot price per pond, specified growths at Liverpool
aed TNew Orleans, specified periods

S_________Liverrool : New Orleans
Ameri-icq: : hIdian : EgpGies : Br.zi?2an : American
S:Tine Oomr#jF_.G.F. Upn at.FaLr a Pcc-ur: Liiddling 7/8"
Season, : : As a As a %: :As a p: : Spread
mo-th li :iid- : Ac- : of : Ac- : of : Ac- of f : Ac- :Liverpool
"*dling 2L I- A-A-4cA-
or day :7/3" :dir tual :meri-:tual :Aoeri-: ual :Axreri-: tul : over
cen : :cs : can H New
S I .Uid- M iid- : :dlid- : :Orleans
: dling11dling_ : dling :


: Cents Ceonts:onts Percent Cents PercenaCents
10-yr. av.: :
192 j-23
to 1936--.37 14.50 lU.bU:1i.L9 7.9o :11.1 1 1729j13.08
1956--37 ..: 14.62 I.7: 14.97 77.1 :17.140 no.o.74. 1
1937-3 .. 10.31 8.79: 7.96 77.1 :13.10 126.-710.1S
1958-39 .. 10.15 3.71: 7.14 70.4 ai.wO 1l6.P: 9.63


1938-39 -
Feb ...
Mar. ...
Apr ...
ay .....
June ...
July y
1939-40 -
Aug. ...
Sep t. .. 3
Oct. ...:
Nov. ...
Dec. ..
Jan.-...


8.55:
8.7I
..21:
S.7:
3.5
2.. 3 :

~.95:


0.95
o.'5
7.02
7.45
7.61
7.31


.53: 7.38
. 69: 3.47
9.39 : 7.3
10.5: 5.24
13.02:11.43
13.91:12.12

12.17 :10. 66
12.55 :11.01
13.32:-11.57
13.71 11.99
13.59:11.84
14.45 i:12.7S
I4.03:12.22
13.50:12.00
13.19:11.3
13.02 11.11
It.17 :11.11
1. SO0 1 0.71
12. S-: 10. 72


69.4
67.4
72.6
70. 6
6s.9
65.9

72.6

75.9
31.2
52.7
83.1

82.6
.32.6
82.3
S3.0
82.6
34 2
32.5
33.0
32.6,
81.2
SO. -
0. 0
30.0
30.5


:11.56

:10.90
:11.06
11;.47
:11.43

:11.35
:12.37
:12.00
:12.4o
:15.44
:17.24

:13.30
:14. g4
:15.74
:16 30
:16.34
:17.73
:17.13
:17.20
:16.76
:17.02
:16.90
:16.71
:lt.35


115.4:9.53
11.8: 9./o
112.7: 9.19
105.0 9.:
103.9 :10. 1
107.7: 9.85

111.7: 9.37
11i.410.30
112.9 :i0.43
10.9:11.532
111.7 :1.32
118.2: l4.S5

107.0:12.90
111.3:13.33
1-12.0:14.05
71I .4:14.1;5
ll4.o: l4. 3
116.8 15.1g?
115.7:14. S-
11,3.c 14. -)
121.7:13.94
124.3:13.77
122.9:14.00
124.9:13.63
127.1:13.50


Percet Cents


A9P7.7i'12. 65
9o.6:12.79
9`.7: 6.79
94.9: 8.73


95.1:
95.2:
93.c:
95.0:
93.2:
92.
9 2.;.


8.60
g ~0
8.69
s.61
9.30
9.45
9.37


92.2. 8.95
95.5 9.02
98.1- 8.92
99.4: 9.+0
ioo0.0o:1o.64
100.5:10.79

100oo.o0: 9.93
100.0:10. 2&
100 10.0O59
100D.0:10.92
100.0.11.12
100.0:71.09
100.0:10.78
ioo.6o:lo. 78
100.6:10.62
101.2:10.42
100.6:10.40
101.8:10.72
101.9:10.74
101.8:10. 0


Compiled from reports of tDo Livorpool Cotton Exchange except for the last
4 weeks, which are from cablos to the Buroau of Agricultural Economics or
from reports of the ::ew York Cotton Exchango. Prices were reported in pence
per pound and converted to cents per pound at current rates of exchange.


1r. 02
13.17
'1. 67
5.
I i' 5 [)
..04
L ;. 61

10.16
1L.10
^).65
11.33
13.32
14.53

12.90
13.33
--'1.05
1i.45
14.33
13.18
L4.81
14.46
13.77
13.69
13.75
13.32
13.26


Cents


1.95
1.83
1.52
1.42


1.42
1.4g
i.o6
1.25
1.59
1.24

1.21
2.08
1.71
1.98
3.18
3.79

2.97
3.07
3.06
3.53
3.21
4.09
4.03
3.64
3.35
3.29
3.03
2.64
2.46


Dec. 1
8
r1n
L9

19
JTan. 5,



Feb. 2
9
16
25


I




S-5-


Middling 7/9-inch at New Orleans was officially quoted at 10.80 cents per
pound, or 0.38 cent per pound higher than on Janwury 26. At Liverpool, on
the other hand, Americnn Middling 7/8 on February 23 was 13.26 cents per pound
when converted at the current rate of exchF.xoe, or 0.51 cent per pound lower
than on January 26. As a result of these movements in opposite directions,
the spread of American Middling P. Liverpool over New Orleans declined from
3.35 cents on January 26 to 2.46 cents on February 23. The spread on the
latter date was the narrowest since November and is 1.63 cents lower than the
spread of 4.9 cents on January 5. The reduction in the spread is apparently
due to somewhat lower ocean transportation costs, to the increased stocks of
raw cotton in Great Britain, and to less concern over the possibility of sub-
stantially higher transportation costs in the near future.

Liverpool prices of Indian Oomra declined somewhat further relative to
prices of American cotton during the past month, whereas Egyptian Uppers and
Brazilian Sao Paulo increased. On February 23 the price of Indian Oomra. was
equivalent to 80.8 percent of the price of American Middling compared with an
average ratio of 83.1 in January. The price of Egyptian Uuper on February 25,
however, was 127.1 percent of the price of American Middling compared with an
average of 118.2 in January and was the highest price since September 1938.
The price of Brazilian Sao Paulo Fair was equivalent to 101.8 percent of the
price of American Middling on February 23 compared with an average of 100.5
in January.

EXPORTS

UNITED STATES: January exports highest in l3 years, 3: times those
in January 9

The 1,027 thousand running bales of American cotton exported in January
were equivalent to 354 1nercent of exports in January 1939 and -'.ere the largest
for the month since 1927. They were about 53 percent larger than the 10-year
(1929-35) Jaunuary average.

Exports from August through January totaled 4,161 thousand bales. They
were approximately 90 percent larger than exports during the first 6 months
of the 1938-39 season and were the largest for the period since 1933-34. They
were 5 percent less than the 10-year (1929-35) August-January averrnge.

During the first 2 weeks of February, exports continued from 351/3 to
3-1/2 times as large-as during the corresponding weeks last year. During the
week ended F-bruary 22 they were not ouite twice as large as a year earlier.

From August 1 throv.gh February 22, according to reports of the New Yer'-
Cotton Exchn-ige, exports totaled 4,600 thousand r-unning bales. This represents
an increase of 2,200 thousand bales, or 90 percent, over exports to the
corresponding date last season. Of this increase 1,165 thousand bales are
accounted for by increased exports to Great Britain. Great Britain and France
combined accounted for 1,430 thousand bales of the total increase over last
season. Exports to Italy and to a number of other neutral European countries
have also been materially larger than in the corresponding period last season.


Cs.-o




cs-4o


Ootton: -Exports from specified countries, average 1928-29 to


Country of
origin and
destination


United States to
Germniy . .7.
United Kingdom
France ......
Italy ......
Spain ........
Belgium .....
Canada ......
Japan .......
China .......
Other coun.
Total ...

t to


runningg run rim. ran. Per- : run. run. run. Iri
: bales bales abales bales cent : bales bales bales bal
98 4 31 0 ---: 838 "5 2030 T7
: 148 207 41 380 926.8: 892 1,195 285 1,3
70 76 21 178 847.6: 520 615 294 4
52 54 22 68 309.1: 345 333 173 3
22 -0 0 22 ---: 132 0 2 1
17 21 10 15 150.0: 101 133 62 1
20 22 15 43 286.7: 130 143 131 2
158 109 71 161 226.8: 916 229 528 5
29 0 19 65 342.1: 170 2/ 39 2
5,679 ill 60 5 158.;: 56 639 478 6
b70 648 290 1,027 35 4.1: 4, 00 3,832 2,i92 4,_1
:January: August to January
*


a.


Per-


es cent
9 Q.5
33 467.7
g88 166.0
11 179.8
909,500.0
36 21Q.4
19 167.2
83 110.4
79 715q4
03 126.2


189.8


United Kingdom: 56 60 55 67 121.8: 324 331 248 352 141.9
France ....: 20 18 17 41 241.2: 116 149 83 161 1q4.0
United States : 10 5 4 2 50-0: 48 23 15 35 233-3
germanry 5/ ... : 4 20 16 0 --: 77 116 110 12 10.9
Italy ........: 11 10 6 13 216.7: 65 65 61 54 88.5
Japan ........: 14 12 12 21 175.0: 64 37 82 105 128.0
British India : 10 20 10 7 7r.o: 36 8g4 42 88 209.5
Other coun. .. 30 32 29 17 58.6: 176 203 195 173 88.7
Total .... 165 177 149 168 112.8: 906 1,008 836 980 117.2
;December : August to December
: :1937: 1938: 1939:_:____________________
:1,000 1,000 1,000 1,000 : 1,000 1,000 1,000 1,000
:bales bales bales bales Per- : bales bales bales bales Per-
:478 lb. l4781 7lb4 .478lb. cent :h78 lb. 478lb.47glb.478 lb. cent
M12lLf Jlb.a cetto8 b


British Ind.ia to
Japan......
Italy ........
China ........
B,lgium ......
Xermany ....
United Kingdom
France .......
Other coun ..
Total ....

Brazil to
Japan .......
United Kingdom
Germny .....
France
Italy .......
jetherlands
e Igi-am .....
Other coun.
Total....
-.omL, frm o f
Austria beginning


101
19


112
7


6q.6:
71.4:


342


127
34


19 5 23 7 30.4: 69 27
12 12 9 2 22.2: 52 42
14 14 19 o ---: 53 4i
19 19 21 27 128.6: 65 48
7 6 12 29 241.7: 33 18
S 13 18 18 28 155.6: 54 6
: 204 94 221 176 7976: 750 398
:December ._ August to


14/


0 18 5 27.8:
16 18 27 150.0:


32
: --- 2/
: --- 2
i 35 3


3 .59
fical sources..,
e Jan. 1938. 4/


4/


55
98
223
16


1 10.0:


466
30
43
33
64
76
34
67


330
12
91
12
6
111
48
92


70.8
40.0
211.6
36.4
9.4
146.1
141.2
137.=?


D e13 72 gg.3
December


129
128
93
65


3 1 33-.3: --- 4 31
1 2/ ---,: --- 7 19
2 15.0: -I
15 7 5. :: 32 56
105 I4 lil.q: 1g5 442 55 i
1f/ &evis6-d:-.- ?_,' Lei sF-tTm -Uu-baLes. I/
'Not available'by countries.


83
118
56
42
17
24
1b


64.8
92.?
60.2
64.6
54.8
126.&
11i.


b2 1i0.-
4 18 7.
includes


61


L_


- 6 -


1937--389, and seasons 1937-38 to date
SJanuary Augast to January
:10-yr.aM: : 1939 :10-yr.av.: : :193q0S
:1928-29 : ,4:as a 5:1928-29 :1937-:1938-:1939-:as a
to : 19391 1939: 10: of: to : 38 39 : 4o : of
:1937-38 : : 1038 :1937-38 : : :1938-9
1,000 1,00000 1,00 1,000 : 1,000 1,000 1,000 1,000


*
^ *
*
*
*


ft

w
II
*
*


-,_


I






cs-4o


-7-


So far this season, reported export to Germany have been extremely small,
310 thousand bales less than to the corres-ponding date last season and 660
thousand bales less than from August 1, 1937 to February 25, 193g.

FOREIGN COTTON: ExTrorts fro-m In din and Brazil drop, from Egy,rt increase

From August through December, total exnorts from British India were 14
percent less th-'n in the corresIondi:1 period last season and in the month
of December viere 20 percent less than in December 1939. Exports from Brazil
made an even poorer showing. From August through December they were 22 per-
cent smaller than a year earlier and in December were 5g percent less than
in the corresponding month last season.

August-January ex--orts from Er1pt this season were 17 percent larger
than during the first 6 months of last season, with substantial increases in
shipments to the United Kingdom,, France, Japan, and the United States. Exports
to Germany were about 100 thousand bales (90 percent) less than during the
first 6 months of last season. In January exports from Egypt were 13 percent
larger than in January 1939, with the United Kingdom, Frrnnce, Italy, and
Japrcn all taking materially larger quantities than in January last year.

i'Eiv'_!D AITD -COKSV1-2TION

UNITED STATES: Mill activity declines aftsr reaching record high

In Janur.ry the seasonRlly adjusted index of domestic cotton consumnotion
declined to 130 after ....ving r c-cbed a new record high of l45 in December.
This represented a somewhat greater decline than had been indicated by un-
official weekly index nuLmbrs. Despite the decline in the season:.lly adjusted
index, cotton oronsunotion in January (730 thousand running bales) exceeded
consumption in January 1939 by 22 percent and the previous all-tine January
high by nearly g percent. It '1as the second largest monthly consum-otion on
record and 36 mprcent larcr than the 10-year (1929-38) January average.. Trade
reports indicate that during the first 3 weeks of February some further decline
occurred in the r3asoneally adjusted rate of consumption. ITevertheless, the
February total will materially cxcF ed. consumption during February 1939. From
August 1 to February 1, domesticc mill co'.:- srtion totaled 4,0142 thousand
bales, and exceeded cnr.srmir.tion during the first half of last season by 19
percent and the previous record high for this 6-month period by 5 percent.

Manufacturers' sales of unfinished cotton textiles were again materially
below production during the past few weeks, according : to trade reports.
Reports also indicate that unfilled orders of many manufr-ctiiurcrs have declined
to relatively low levels and that, Rt least in some instances, sizeable
quantities of unsold stocks of gray goods have accumulated. The continued
restrictions in sales and increased stocks, along with a substantial decline
in general domestic brasincss activity, largely accounted for the decline in
mill activity since December.







CS-40


It is reported that stocks of cotton joods in retail establishments are
relatively low but that retail sales have been holding up quite well. This and
the continued relatively high prices of such cor.i.eting products as jute and
burlap (despite considerable price declines since early December), wool and
silk, eand the large s&aLros of ccttcn t:xtil.cs fir export are factors which
should tend to caus3 dor:c-stic ctton mill cLnsuwtion to continue relatively
high. micverthelbss, mill co',.s'.;rn-tirn is exp.-cted to decline still further dur-
ing the ne-xt several wa:i:s. This seems p,-.rtirularly likely if general business
activity should cont inuc t, dr,.clin-3 du.'int; the months inmunodiately ahead, as is
quite generally ,c:: *ct:,d.

EROP.: Mill acc vit', h.iuh in 3i-s.ral countries,
1ov" i '. L ', i a;nrr'c- ar,-, .

Unrit-.d Vin-dom: "Cottou mill activity in the United Kingdom during January and
F-.i *arv r.,inod high. Spinning mill activity in Dcc_.-mnb-r was estimated at
85 o-rc-.int of th. oretic.l si-irl: shift capt.city, and little change is thought
t- h.-.'C occur.rod sinec t.ijn. Excrt for the- hostagee c*f labor, activity proba-
bly x im.ld L.: hirrhi. Ordor b-okz of spinn.r" -.nd nanufoiturors wore well fill-
ed :i t, 1.end of Lcccnmbr, with some of thr'-m scld out uti l the end of June.

,r.v, bu-rincss 'u,..w' vomi-.vhat h..m-percd n T'.cecinb -r b& dcvclormonts in the
ra. ',-. !,on mra.ke': -.d k a ,.nding .lans for thn r,: ulntion c..nd control of the
i, ['; r n ,_nLa, r,,'y ,.r Fcl:ruary Tnm.nufact'r. rz sal.'.s wi-r restricted for
si I' r7 '-Ao r ovcll as by r..duced dcinr.rds from bvuyrs. li)ti spinrners'
In.' v -. ,. c..n fixu d, .f.uctiv. J nuary 4, ,.nd only "o rr. ttd increases"
al i '. ^--Ji -,.iC Of 11, 1. cr number of ir-etail a.rt4'l s, buyers have
h.., .. ir .."t:-, to 0 icc'..-ulLt- stocks in itlicipatio-o. of higi',r prices. Old
c-' -....'. : : ::; : : r. -r.L.ivv-dr tc, b' monrilc to last tI.c industry at a high
r,.L e 'eLv..;" -:ori p. ',:.-s t,;. fi-. t h}.al" n1 140.

Ti] tc t'..' i'n y'.rn ma-rfginis -.:crc fix.:d by the British Govorrtmnt yarn
pri.c ros'5 .T7-,c t .n -'-;...C ,-u7i f'icd by the, incr .se in y,,arn production costs.
SJ-, r': n I r--,. fh.r .A',rric-L- c'-tt- r ya.rn: ir Lr-c...r."rci f'r-.m the middle of
A.. *. o .. ...-. ..', :-.-2, L ,i.c .,d b- nr : :,r 1i mL.c. .t... a rise which
SI---- ,..1- ,',. s .t' i J-i i4r1-;r.sc- in Mr,-'Lits. 'y,., f-x:d margins
br'_; .: -'c '..'. r c c rt ..; ir- r-t -f' the- xcpesi-.; p.', -.rtit ,r t rv-hich the
s. *- 1 Tt :ir itici trat T.ianoasbirc cr.pa'..y r-ncrr.s for tho
lr ', -.i '.-9 v. .! r'1 v.:w ..'I:" o.w iits than f'-r v. 1 .' ti-ne back. For
the J ..st hlf 1', KI( -: ir ;:. c-c r.cecrrn. moct cf them ir, th: O0ldham dis-
tric': 2..%. t '.L: .. -i c .n s'cti.c is 4 c.nc,.,rrtrtcd hav, announced an average
pVc '" .,' f-, '"., *. .17,,".o) p^r c.-crony. Tn the corre.sponding ha.lf-year of 1938
tnc z-:: -' or,:,it r-.r ccmpan-- vw:.s -.nly E12F (1',620). 1/'

';c:- r 1n.'ustry Cc ntr-l Order I'lo. 4 b.camr eff.,ctive Pcbruo-y 14 ostab-
1. "'.... -,. ..r".ti f. for :rv.nufacturc nrd dolivcr-y of cotton goods. Tlhi s oror
r.r .:.. t'it Gcv.-r'Lr:...t .,r'dcr.' b r iv-'n -riority over all others and that

"- "-r t % '^'..'_. s s Dr- cturn r *-'.:.-*rc.i t in thi n I r-.hk stcr Guardian
.2 ": 2 1, '.'% *. i fairthuicr r.-pcort published on Januc-y 10, 1940.


- 8 -





CS-40


-- 9 -


exports should rank second. The encouragement of cotton textile exports is
said to be one of the purposes of this men.sure. Cotton Industry Control Order
No. 2, effective January 4, which fixed yarn margins, was also designed to help
exports. It would appear that there are at least two important reasons why the
British are anxious to maintain cotton textile exports. First, and most im-
nortant from the standpoint of the present emergency, is the foreign purchas-
ing pcwcr created by such exports. Even though foreign exciangeo is required
to purchase most of the raw cotton used in minuf'-cturing such goods, the re-
turns from the manufactured goods are pro-tbly around three or more times as
great as the cost of the raw cotton used in producing these goods. The second
reason is the desire to maintain foreign markets in order to reduce the amount
of unemployment which is likely to exist during the period of readjustment
following the war.

France: 'rill activity in the French cotton spinning and weaving industry was
apparently maintained at a fair level in December, largely on the basis of
orders for military and civilian defense purposes. At that time spinners and
weavcrs still complained of an insufficiency of raw cotton supplies available
to meet the demands of the civilian population. The Government, under the
pressure of wartimni conditions, is determined to curtail the consumption of
cotton textiles for non-military and non-civil defense purposes. The semi-
official import orgra.izcaion has raised the fixed price for raw cotton to be
used in the m'nufacturo of civilian goods from 590 francs'per 50 kilograms
(12.17 cents per pound) in October, basis Strict Middling, to 750 francs
(15.22 cents) as from December 14. Prices cf cotton yarns and manufactures
have boeen marked up accordingly. It is not known whether any further change
has been mado or not.

Trade reports indicate that during recent weeks mill activity has con-
tinucd fully as high as in December. It scorns probable that mill activity in
France may have increased since December. This probability is based on the
roport'd coordination of British and French cotton mills, the marked increase
in the combined imports of cotton into Groat Britain and France, and the
shortage of skilled labor in British mills.

Italy: Reports indicate that in Italy a somewhat more liberal release of
foreign exchange for raw cotton imorrts and improved credit facilities for
cotton shipments havo occurred in recent weeks. Cotton mills appear to have
increased their activity during December and January with at least a small
amount of- overtime in the busiest mills. Export business of the Italian cotton
industry also appears to have beeoon well maintained or increased, and the prices
received for czp-.rt sales are reported to be satisfactory.

Central Europe: Prozs information releasodesome time ago states that the de-
tailed delivery agreement between Germany and the Soviet Union provides for the
supply to Gorr.any, am<-ng other articles, of relatively large quantities of
Russian raw c-tton, according to a re-cort from the Office of tho Agricultural
Attaoche at London. The quar.ntity of such cotton involved was placed at







CS-40


100,000'Qmetric tons (about 460,000 bales of 4178 pounds net if in terms of
lir.t cotton rnd a little less than one-third this amount if in terms of un-
ginned cotton) of high grades, and 50,C.OC t)is (2300,010 bales) of low grades.
It is not indicated when and by which rcutc delivery is to b? made, nor is
it known for which sector of h, cotton inLust.:-" in the German-ccntrolled
area the supply is mainly intended. It had '.rvios1'- bon assumed that, in
the case of Eussian d&liverieb. of rL.a, cot'e or. to. Germa:..y, th.3 latter country
would be called upon to supply i.n rutuin scrcn cotton manufactures for Russian
consumption. The above mentioned rec-ts dD n.:t no+e any such provision.

It is beicv'd that frc.m its accumulated stocks and current crip the
Soviet Union could moot dolivw-y obli rtions for 150,000 tons of lint cotton.
But this might well restrict huiusian cotton mill consumntion considerably.
In the event of such ar. undertal.ing Pussian transport facilities n.y prove
inadequate to give speo.dy effect to, the undertaking Sh'iould Germany succeed
in getting nearly 700,C0O bales of Pussian cotter. it would be cyuivalont to
about one-third of the total ] 98 imrLortL of cotton irto th.e arc.a now under
German control.

ORI"FT: ,. I1 activity higher in Indin., lov.-r
in h ..-.nlha a'-d ,T ur-

The 268 thousand bales (zf apprcrxir'at, ly 4Cr" pounds. n,-t weight) of
Indian cotton consumed by mills in :ndia during Decembecr was .pprnximately 11
percent larQ.r than corzum.rtic.n n I:':.vcimb-r Tt wvs th:'., l''f. total for
any month .into January last v.'-r but s muc1hat smnallter tha.n th.. 283 thousand
bales consiT.n od in Docemb" last so .s::,. This incr-oaso is bcll,_--, Ad to be a.
result of roducod competition ir:,m im,.c'rt..d Pritish cotton tcx+'los and
possibly of the sharp increase J'hich occurredr.d in jute and jute product prices
dur-. the preceding 3 ori 4 mcct}is. Lzsrite th., substantial incr.-asc in
Deceombor, to'-.al consuinrtion fr :r,. Au.gEust thr"-ugh Dpcomb.-r was 70 thcuzond
bales (5 percent) loss than in t'he c:'r'cspo:-di'ig -criod lc.nt season, A late
report indicates that consumpti..n in aJnug.r. was 'bout the sL'nc as in
DL cC1TY'c I
:Dt- ooi.bcn',

Cotton mill activity ir.n .*rh$.i 6u,-ir. g January wcas rcoortcd to have
been slightly loss than during th,, -., 'viius ..1:.iD., There was no irfcrmation
of c," signiLicart chr. ,o in activity: in c p.,..r rats of Chin,.. mills in
Sha.n,-iai are, for tha most part, stclezd u. v-ith rr.iv cotton for several wooks,
mainly with imported cotton, oud a.d,.i-Li;.nl substartia,.l quart ities are afloat
for this market. The reduced act5Vit:,, is Lppark:.-tly attributable to reduced
sales md the weaka.oss of the .r.rk-.t fc- 2':,-count yarns and coarscr6 Market
margins on 20-couL yarns and e:lo., arc said- to be very low at present, and
the teniidency is to switch to higher count yarns.

Within the last few weeks rannounceir.ent s have been released pertaining
to new control measures in North China, apparently designed to increase the
amount of cotton going to JCan, It is indicated that the new system of con-
trol would be instituted under the directicr. of the Jap-mese Asia Developmrent
Board, Under the supervision cf this Eoard the I--orth China Cotton Association
has been given control of the St.I-? '.n". shipment of cotton to North China, and
the transportation and distribution -f. cotton in the Tientsen area. It is


- 1C -





CS-40


- 11 -


reported that thece measures are detiJ-ned to insure adequate exports of this
type of cotton to Jazancse mills at fixed prices. Y'onthly allotments will be
made to mills in North China on the basis of quantities actually consumed dur-
ing each m-'ntl. In viuw of the fact that arrivals of 'Chinese cotton at ILorth
Chinr. rmrkcts are n-At ey-.ctcd to meet the requirements of North China alone,
existing shortta-e of supplies may become still m=rc acute in the near future.

Prliiinary '. from Ja-.an indicate that cotton consumption in Japan
declined soTnethirg like 18 percent from December to January,. which is con-
siderably more than sasoi.al. This decline was semcwhat surprising, in view
of the sharp increase in cotton textile exports in December. Mowover, exports
of cottocn cloth in January were only a little more than. half as lLr.o) as in
Doccmber, The decline, in mill consumption is attributable, in part, to season-
ral factors and in pcrt to a shortage of npgrating power, which has confronted
Janan.s;O mills in vary'n: degrees for some months, and perhaps in part to re-
duced cloth cx'orts.

AC.E.AG ERODUTCT Ir. STOCKS, AlD SUPPLY

World crcag. reduced, production .bout unchlan.od

Rpcrts thus far rc.coived nurt-Linir-r to acreage and production durir-g
the 195-40 season subsf!.rntiato earlier forecasts that world production would
showv relatively little clar.,o .s ,co.poar-d With 198-39. It is nm-,; estimated,
however, that about 2,700 .thous.r.3 fo.wc;r acres ivill be harvested this season.
Estimated total world prduc+ion, cf 28,800 thusr-Id bales (of approximately
478 pounds), is only 2C0 th.-usand bales loss than the estimated 1938-39 c-op.
It is, hcwcvcr, 9,850 thousand bales loss than the record crop of 1937-38.
The estimtes now ovv.il..-le iL.icvcte that nr auctionon in Russia and Egypt may
be somewhat larger this season than l.st season, but in r.,st of the ether
larg-r produci'ig ccuntrics production is either about the same or s,'m,-'.*hat
sminller than inr 198-39. The decliinu in the world acreage is largely ac-
counted for by the reduction of nearly 2 million acres in the estimated area
which 1will be harvested in India during the 19C'?-40 season. Egypt arnd China
arc nthr'r inp:rt.'-tt producing countries in which the current season's esti-
mated h..rvT'ted acreage is less than in 1938-39. In most of the other coun-
tries f-r v.hich data are available, the area is about the samno or. slightly
hiphjr thuan it was last season. In most countries the 1939-40 acrer.ce is
Tr-te-ria"1y less, than th-.t of 1937-38, when total world a.r.:aro (93 million
acres% w for 1939-40.

Govorniun,:.nt stocks r:uc-Cd 850 th',us"-.' b'.l., from
mid-january to -id-F':br-r,'

Between Jaz-uury 15 '-rd Fclbru..ry 19, Govoernmcnt loan stocks dLclined ap-
proximacly 670 thousa-l ba.ls. This r:ducod the total stocks of Govorrn.mert-
financcd cotton to -:-r'ly 9,R00 thousand bales, includInc; more than 650 thou-
sancd bales of su',:h cotlr.n v'h.icl is being, or will bu, .xchrngod to Groat
Britain for rubb-r. I, April la:t 1 -'car Govcrnncnt-finanscd stocks reached the
all-time high of r-.arly 11,400 thousza.d ba.les.






CS-40


UNIVERSITY OF FLORIDA

3 1262 08900 3981


- 12 -


Sales of loan cotton equities by farmers in late January and the ftirt
half of February were very small, according to reports to the New York Cotton
Exchange Service. Until such sales increase requests for the release of cot-
ton from Government loan stocks probably will be small. However, there may
hava ben considerable quantiti3s'of loan cotton equities sold earlier for
which no requests have yet boen made for the release of the cotton.

Cotton: Estimap.tes of acr,3-ge and production, specified countries
and world total, 1937-39 to 1939-4o
C tArea :Production 1/
Country :l937-3S:193-,39:3- h-2 1937-38 : 1938-39 : 1939-4 t
S1,000 1,000 1,000 :1,000 bales 1,000 balns 1,000 bale
: acres acres acres :47S lb. not 476 lb. nct 478 lb. nMte
*
United States ...; 33,623 24,248 23,926: 16,946 11,943 11,792
India .......... : 25,521 23,553 21,600: 4,741 4,285 4,100
China 3/ ........ : 9,3)00 5,580 5,000: 3,600 2,300 1,900
Russia .........: 5,163 5,147 5,190: 3,700 3,800 4,000
Egypt ...........: 2,053 1,852 1,687: 2,261 1,728 1,815
Brazil ..........; 6,010 6,000 : 2,075 1,913
North ..........; 2,)85 2,224 2,150: 745 64i 631
South ..........: 3,525 3,776 : 1,330 1,272
Argentina .......; 815 84l 927: 237 327
Uganda ..........: 1,759 1,530 l1,7: 11/ 349 4/ 253 5 289
Anglo Egyptian
Sudan .......... : 443 !58 427: 264 263 231
Burma ........... : 563 401 0oo: 126 g9 100
Chosen .......... ;: 547 577 596: 214 187 183
Bulgaria ........ : 125 136 166: 47 32
Greece .......... : 173 187 191: 75 67 63
Syria and Lebanon; 86 93 103: 26 39
Tanganyika ...... : / 6/ 6/: 51 4 /2 66
Yugoslavia ......; : 7 14 : 3 6
Total foreign --:-------------~--
countries .....: 59,377 52,752 50,372: 19,704 17,057 17,008
World total 7/ .: 93,000 77,000 74,300: 3S,650 29,000 2,8S00

Compiled from official sources, and reports of tno International Institute of
JAgriculturc, or 4stibntted by.t Bu ur-i or agriculturall Econonics.

1/ Theoretically, these estimates include thc total cotton production in each
country. They are frequently referred to as estimates of the "agricultural
crop" to distinguish them from estimates of the "commercial crop", which ex-
cludes that cotton which is consumed on hand spindles or in other ways, with-
out entering commorci-il chrnncls. These estimates, therefore, should average
larger thr.n the estimates of the commercial crop. Because of inaccuracies in
some of the available estimates, howavcr, this is not always true.
2/ Preliminary. 3/ Includes Mancnuria. 4/ Exports. 5/ Available for export.
/ Comparable data not available. 7/ Includes estimates for 20 to 30 very
minor producing countries, which in nost of the years for which we hove
records harvest from 20,000 to 40,000 acres and produce from 5,000 to 12,000
bales.