The Cotton situation

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Material Information

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

Subjects

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

Notes

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

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 020142316
oclc - 01768374
lccn - 63045282
Classification:
lcc - HD9070.1 .C78
System ID:
AA00013000:00001

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World cotton prospects
Preceded by:
World cotton prospects
Succeeded by:
Cotton and wool situation
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Wool situation
Succeeded by:
Wool situation
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Cotton and wool situation
Related Items:
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Full Text
t.
t4 V MUNITfD STATES' DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
W"ashington
: November 1936
TH3 COTTON SITUATION


3i4 *"ii -;Itile l:. :ift1v 4 a iPrlpts, formerly used for this report, has
Changed, to The Cotton Situation, to correspond wftJ titles of other
040 .ep.7 rPorts of stiLlar nature to be isG z4r by the Bureau of
to.ut ral oonomios.


M2F t

*! ..... "* -,* Summary

M O.EPOSITORY
13PO1..0M .. relatively steady during October and the first

S. lblar. Prices declined only moderately on November 9 and 10,

the: retun'as of the November 1 report of the Crop Reporting

.: average price in October was 12.07 cents compared with 12.05

mber and 10.96 cents in October 1935. Important price strengthening

during recent weeks have been the high degree of activity prevailing

uIeftic cotton textile industry, a fairly active foreign demand for

cotton, and the comparatively small prospective world supply of

Caotton.c

t' J :Ilember 1 estimate of the Crop Reporting Board for the United

.. .production of 12,400,000 bales in 1936-37 plus a world carry-over

: 4 *I ut 7,000,000 bales, gives a total prospective supply of American

4pit 'for the season of about 19,400,000 bales. This is slightly smaller

U"t loat season's supply, is 5 percent less than average supply in the

3 Oi years ended 1932-33, and is 17 percent below the average for the 5 years

1-::' l3:: ia:" to 1935-36. With no reduction in stocks of government-financed

; ;olEto %R, the total supply p free cotton would bo approximately 16,400,000

'"!bai; .m. The outlook is for a world supply of all growths of roughly

2,100,000 bales. The supply of American cotton in the present season will
:. i',. t"i: ..: ., ; ':;
;: aBwt to 46.1 percent of the total world supply of all kinds oompared with
7, "-.i percent in 1935-36 apd the 10-year average of 57.1 percent.
*tI


flu





CS-1 -2-

Exports of cotton from the United States in October amounted to

861,000 bales and were 21 percent above exports in October 1935. Exports

in the first 3 months of the current season were 12 percent larger than in

the corresponding months of last year. Exports from Brazil in the 12 months

ended July 31 were only slightly larger than in the same period a year earlier

but were much above the level of any previous season. Shipments from Brazil

to Japan last season were 135,500 bales compared with insignificant quantities

in earlier years. Total exports from India for the 2 months, August and

September were above those for the corresponding period in 1935 but were

below the 1923-24 to 1932-33 average.

Conditions continue to indicate the probability that world consumption

of all kinds of cotton in 1936-37 will be as large as or larger than in

1935-36. The very high degree of activity which characterizes the domestic

cotton textile industry is perhaps the brightest part of the world outlook,

although prospects are for maintenance or a moderate increase in mill

activity and cotton consumption in the United Kingdom, on the continent of

Europe, especially in the former gold bloc countries, and in the Crient.

During Sep!tember imports of American cotton by Japan continued small

relative to other growths, especially Indian and Brazilian, However, the

volume of exports from the United States to Japan in September and October

and the fact that the marketing season is mostly over in southern Brazil

indicate th-t American cotton will occupy, both absolutely and relatively,

a much more important position in Japanese imports in the immediate

future.

The relationship between yarn prices and raw cotton prices has been

very favorable in China, and mill activity was considerably higher in

October than in August and September. The existing price relationships and

the probability of a continued brisk demand by Chinese mills for Chinese


a .







cs-1 -3-

cotton make it seem improbable that raw cotton prices will decline

sufficiently to permit as large a volume of exports as had been anticipated

previously.

On the basis of conditions in November, total world production of

all kinds of cotton in 1936-37 is estimated at a record high of 29,900,000

bales, of which the American crop of 12,400,000 bales represents 41.5

percent.

The picking of what is expected to be a record high Egyptian crop

is progressing rapidly, and innings up to November 1 were substantially

higher than those for tbo corresponding date last year. It is reported

that a substantially larger quantity of Russian cotton has boon harvested

so far this season than in the same period last year. Reports indicate

that cotton acreage in southern Brazil, in Argentina, and in Uganda will

be larger this season than in 1935-36. The cotton area in the Punjab

region of India on October 1 was considerably larger than on the same

date last year. A large part of the cotton produced in this region is

irrigated cotton comparable in grade and staple with the bulk of the

American crop.


Domestic Prices Comparativoly Steady, Liverpool Prices Favor Consumption of
Foreign Cotton

The price of Middling spot cotton it the 10 markets averaged 12.07
cents in October compared with 12.05 cents in September and 10.96 in
October 1935. The high for the month was 12.34 cents on October 1 and
the low was 11.84 cents on October 26. Prices were 12.09 and 12.00 cents,
respectively, on Novoc.ber 9 and 10, following the release of the November
Crop Report compared with 12.12 and 12.20 cents, respectively, on
November 6 and 7. The average for the week ended Ncvo:.bor 21 w.s 12.27
compared with 12.01 cents in thu preceding week. Important price strengthen-
ing factors during recent weeks have been the *ontinuod high level of
world mill activity and cotton consumption, especially in the United States,
and the comparatively small wrirld supply of Amerircn cotton oven after
allowing for the recent substantial increase in crop prospects.






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The price of foreign cottons relative to American are still such
as to encourage their consumption at the expense of American. While
the price of three types of Indian cotton expressed as a percentage of
two types of American tended to be a little stronger in the first 3
months of the present season than in the closing months of last season,
the price of Egyptian Uppers declined very sharply in the last 2 months
and, at 108.2 percent of the price of American Middling in October, was
the lowest relative price for any month since July 1935. Brazilian
Sao Paulo Fair at 96.4 percent of American Middling was slightly stronger
in October than in September and August, but was still comparatively low
in price.


World Supplies Increased Despite Reduced Supply of American


The November 1 estimate of the Crop Reporting Board for a crop of
12,400,000 bales in 1936-37 plus a world carry-over of about 7,000,000
bales gives a total prospective supply of American cotton for the
season of about 19,400,000 bales. This is about 250,000 bales less than
the supply in 1935-36 and about 1,000,000 bales or 5 percent less than the
average supply of 20,436,000 bales in the 10 years ended 1932-33- It is
17 percent less than the average of 23,296,000 bales from 1931-32 to
1935-36. Since slightly over 3,000,000 bales are Government financed
cotton, the total supply of "free cotton" for this season, with no
reduction in stocks of government-financed cotton, would be approximately
16,400,000 bales. On the basis of conditions in November, the outlook is
for a world supply of all growths of cotton in 1936-37 of roughly
42,100,000 bales, an increase of 1,600,000 bales over 1935-36 and of
6,300,000 bales over the 10-year average. The expected increase is
entirely accounted for by a larger supply of foreign cotton which is
10 percent above 1935-36 and over 47 peruznt greater than average. The
supply of American cotton in the present season will amount to about
46.1 per cent of the total world supply of all kinds compared with 48.7
percent last year and the 10-year average of 57.1 percent.


Exports Largor than Last Year

Exports of cotton from the United States amounted to 861,000 running
bales in October, an increase of 21 percent over exports in October 1935.
Exports during the first 3 months of the current season totaled 1,613,000
bales compared with 1,440,000 in the same months of 1935 and an average of
2,149,000 bales in the 10 years ended 1932-33.

Exports to the United Kingdom in the first 3 months of the present
season totaled 344,000 bales or 9 percent less than in the corresponding
period last year. Exports to France of 288,000 bales were nearly twice as
large as those of last year. Shipments to Germany amounted to over 200,000
bales and were 15 percent more than in 1935. Exports to most of the other
European countries, with the exception of Italy and Spain, were larger
than in the corresponding months last season. Shipments to Japan were
441,000 bales, or nearly 27 percent larger. A substantial increase in
September and October over the corresponding Imoths of last year more than
offset the very small experts in August.






CS-1


Exports from Brazil totaled 742,918 bales of 478 pounds net weight,
in the season ended July 31, 1936. This was only a small increase over
shipments of 736,455 bales in the 1934-35 season,but was more than three
times as large as the 272,472 bales exported in 1933-34 and was nearly
nine times as large as the average of 86,000 bales in the 10 years ended
July 31, 1933. Comparing the destinations of exports in 1935-36 with
those of the preceding year decreases occurred in shipments to Great
Britain, Germany, France, and Belgium, while larger amounts went to
Holland, Italy, and especially Japan. Exports to Japan were 135,500 bales
compared with only 11,000 in 1934-35 and 7,738 in 1933-34. Exports
from Brazil to all countries in August were 139,881 bales compared with
55,335 and 68,275 bales, respectively, in the first month of the 1935-36
and 1934-35 seasons. Shipments of nearly 47,000 bales to Japan compared
with less than 1,000 in August of last season. All of the important
European countries, with the 'exception of Germany, took substantially
larger quantities of Brazilian cotton than in the corresponding month
of 1935.

Cotton exports from India were 122,100 bales of 478 pounds net
weight in September compared with 105,000 in September 1935 and an
average for the month of 130,100 in the 10 years ended 1932-33. The
cumulative total for August and September amounted to 263,500 bales,
an increase of 26 percent over the total for the corresponding months in
1935 but 8 percent less than the 10-year average. As compared with
last year, larger quantities were shipped to France, Italy, Belgium,
China, and, Japan, and smaller amounts to the United Kingdom and Germany.


Textile Situation Improved

Outlook favorable for world consumption of all cotton

It was pointed out in the last issue of Ootton.Prospects that world
consumption of all growths of cotton reached a record high in the
1935-36 season and that conditions in the early part of the present
season indicated the probability that world consumption wouldbe as large
as or larger in 1936-37 than in 1935-36. Conditions in October and
November continue to indicate the probability of a very high level of
world consumption of all kinds of cotton in the season as a whole. If
tendencies which have been in evidence during the last 3 months continue
to develop through the rest of the season, world mill activity and
cotton consumption in 1936-37 will be featured by a consumption in the
United States somewhat larger than last year and approaching a record
high; by a level of mill activity and cotton consumption in the United
Kingdom as high as or higher than last season and well up toward the pro-
depression average; by some slight or moderate improvement on the
Continent of Europe, especially in those countries which have recently
devalued their currencies; and by as large or perhaps a larger consumption
than last year in the Orient as a result of prospects for a continued
heavy consumption of cotton in Japan and'India and the recent considerable
improvement in the Chinese cotton textile industry.


-5-







CS-1


-6-


Forwardings of American cotton to world mills so far this season
have run well ahead of those in the saife period in 1935-36 as the result
of heavy takings by domestic millsB according to the New York Cotton
Exchange Service. In the season up to November 7, forwardings totaled
3,699,000 bales compared with 3,292,000 bales in the corresponding
period in 1935-36. Forwardings to domestic mills were 2,495,000 and
1,957,000 bales respectively, this season and last season. Forwardings
to foreign mills were 1,204,000 and 1,335,000 bales, respectively.

World demand for and consumption of American cotton should be
strengthened in the present season by the very active condition of the
cotton textile industry in the United States and by the large consumption
of all kinds of cotton in foreign countries. However, as was pointed
out in the last issue of Crtton Prospects" ..... the world consumption of
American cotton insofar as it is affected by consumption in foreign
countries will depend to a considerable degree upon the availability
and price of American cotton relative to supply and price of foreign
cotton ....." The table on the last page shows the veryclose inter-
relationship which has existed during the last 15 years between the
ratios of prices, exports, supply, and consumption of American to all
kinds of cotton.

Since exports tend to respond more quickly to changes in relative
prices than consumption does, the export ratio perhaps can best be
compared with the average price ratio in the August to July year. On
the other hand, in comparing relative prices with the consumption ratio
the former have beencalculated on the year beginning April 1 which in
effect gives a 4-month lag to the consumption ratio.


Domestic consumption high.- The domestic cotton textile
industry continues to run at a very high level. It is reported that
mill sales of unfinished goods during October exceeded the large output
in that month by about 50 percent, and mills generally have added
considerably to their already large backlog of unfilled orders. Mill
margins, or the difference between the estimated value of cloth
obtainable from a pound of cotton and the price of cotton, are very
favorable at present. Margins advanced during October and averaged
14.88 cents for the month against 14.03 in September and 13.31 in October
a year ago (based on 17 constructions of gray bloth. The very large volume
of unfilled orders and the prospect of a continued improvement in general
industrial activity make it seem probable that a high level of mill
activity and cotton consumption will be maintained throughout the reminder
of the season, even after allowing for the fact that some of the recent
buying of cotton goods has resulted from the building-up of stocks to
normal proportions. Cotton consumption in October amounted to 646,000
bales and in the first 3 months of the current season to 1,851,000 bales,
an increase of 17 and 31 percent, respectively, over consumption in the
corresponding months of last year.






0S-1


European consumption fairlL ih i/

Developments in the Europec.n cotton textile situation during the first
quarter of the 1936-37 cotton season have bcen generally in line with the
indications of a moderately favorable season in the new year, i.e., somewhat
above average total consumption of raw cotton. In no important country
is there a prospect, at present, of any material ch-nge in consumption as
compared with the past cotton year.

In the United Kingdom good first quarter business has been done in
the home market, but recovery in export trade is still more of a hope than
an actuality. The French cotton industry has experienced a fair revival
incident to the devaluation of the franc, and, since this move has greatly
increased the changes for a policy of economic expansion, the outlook
for the cotton industry remains hopeful. The Dutch and Swiss cotton
industries have regained considerable competitive strength through
devaluation, and some definite revival is expected. The same is true of
Czechoslovakia, though exorts will doubtless be affected by Italy's
reappearance on Balkan markets.

Italy and Germany, on the other hand, have remained much restricted
consumers of r?.w cotton through October. Grounds for improvement are not
evident in Gern.cny, And Italy will probably see only a small gain in
cotton textile mill activity in coming months, though exports of cotton
textile products will be facilitated by the revalued lira. The
abolishment of the export bounties (drawbacks) hitherto paid by the Cotton
Institute will at least partially offset the price advantage that Italian
exporters would otherwise gain.

The effects of the numerous devaluations of currencies have
as yet been small, taking the Europecu. cotton industry as a whole. The
devaluing countries have derived some benefit from improved export sales,
but seemingly at the expense of other countries. Thus, tlo reappearance
of Italian competition in southeastern Europe has taken avwy trade from
Austria, Czechoslovakia, Germany and Poland, notably i: yarns in Yugoslavia.
The same is doubtless true of other countries in other directions. However,
there is reason to anticipate that a gradually increased demand for cotton
goods will be gen-rated by the restoration of more normal currency -nd
price relationships between the major European countries, both through
enhancement of consumer purchasing power and the greater readiness
of distributors to acquire stocks as monetary confijnco and stability
are regained,

The possibilities for central Europenn and Italian cotton yarn and
cloth export business in 1936-37 scom definitely improved in one important
sector the Danube Basin where largo crops of both bread and feed grains
and fairly good fruit crops have boon harvested, coincident with favorable
export price developments for all kinds of grain and fruit, and for
livestock products. The capacity of the peasant population in that area
to buy cotton goods should be considerably increased this year a fact
that would, of course, also have favorable roporcussions for the domestic
cotton industries in those countries.

/ Prepared largely from a report from Lloyd V, Stoerc, Agricultural
Attache' at Berlin. Report dated November 9, 193u.






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European port stocks of cotton at th; end of October were nearly
50 percent higher than in 1935, when, however, stocks had generally
fallen to very low levels. Current stocks are by no means burdensome,
or even large, in comparison with earlier years.


Stocks of cotton in British and continental ports, end of
October, 1935-36


: Grat :
Type of Britain : Continent Europe
cotton
cotton 1935 : 1936 : 1935 : 1936 : 1935 : 1936

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

American .......: 184 262 217 264 401 526
Indian .........: 30 76 33 41 63 117
Egyptian .......: 37 39 17 12 54 51
Brazilian ......: 15 144 29 39 44 183
Others ..........: 194 246 61 77 255 323

Total........: 60 767 357 433 817 1,200




The principal increases as compared with a year ago are in stocks
of Brazilian, American, Sundries, and Indian staple, in the order named;
and the bulk of the increase has occurred at British ports over 300,000
bales with a rise of only some 75,000 bales at continental ports,
largely at Havre.

Raw cotton buying by western European countries has been active in
the past 2 Months, in some countries stimulated by devaluation or rumors
of devaluation. Central Europe has been more conservative, and Germany
and Italy continued to operate under the usual restrictions, though Italy
has initiated steps aimed at facilitating imports when linked with exports
of goods.

United Kingdom.- Sales prospects for American cotton in the United
Kingdom continued favorable at the end of the first quarter of the now
season. Imports of American are running about level with last year and
mill takings are the best in 3 years, while stocks are relatively low and
prices more favorable to the use of American cotton. On the other hand,
imports and stocks of Brazilian cotton are exceptionally high, export markets
for cotton manufactures and semi-manufactures are still sluggish, and the
price of Egyptian Uppers has dropped within the price range of American
cotton of comparable staple length.





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-9-


In general, Lancashire is doing good business in the home market,
but the export trade is still unsatisfactory. Prospects for mill activity
being sustained at or near present high levels are fairly favorable,
though there are also unfavorable factors in the outlook, the latter
including wage controversies, rising mill costs and the continued decline
of the piece-goods export trade. Continuance of a favorable development
of domestic economic conditions, which will derive new stimuli from
armament investment activity, will doubtless sustain domestic purchasing
power and consumption.

British cotton mill activity and mill employment remain favorable.
Mid-September employment in the industry was slightly higher than for any
corresponding date since 1931, and the payroll was considerably higher.
A high rate of mill occupation is also indicated by mill takings of raw
cotton. There were substantial increases of these in October. From August
1 to October 31, they amounted to 669,000 bales compared with 607,000 in
the same period last year, 604,000. two years ago, and 650,000 three years
ago. The share of American in this year's takings, as compared with last
year's, has increased, largely at the expense of Egyptian. Compared with
3 years ago, however, the share of American is still quite low, chiefly
because of the sharp increase in the utilization by British mills of
Brazilian and Indian cotton.

Domestic demand for cotton goods continues favorable and the home
market is a hopeful factor in the demand situation. In the export field
satisfaction with the yarn position is more than offset by the unsatis-
factory trend of piece-goods exports. Roughly converted into pounds,
January September export figures for piece-goods were 232,900,000 this
year, compared to 296,300,000 last year. Yarn exports, on the other hand,
were 113,200,000 pounds in January September 1936, as against 104,800,000
pounds in January September 1935. Business in piece-goods with most
British Dominions and possessions. and with some South American countries
is fairly good, but Indian takings continue disappointing. It is hoped,
however, that, with Lancashire's large takings of Indian cotton in the
last 2 years an improved preferential arrangement for British textiles may
be concluded in connection with the new Indian trade agreement soon to
be negotiated.

Concern has recently boon shown over labor developments, rising fuel
costs and the small but perceptible burden of the special levy under the
Spindles Act. These increases in manufacturers' cost items, though
they probably will have no serious consequences in the home market, are
not encouraging from the point of view of textile exports, in which
competition is at best met only with great difficulty. The future value of
the Japanese yon is also causing some anxiety.

Germany.- The German cotton textile position in the first quarter
of 1936-37 has boon'characterized by increased difficulties in the pro-
curement of raw material, low imports of cotton and increased utilization
of fibre substitutes. Operations of tho cotton mills are reported to
have procoedud on substantially unchanged levels. Employment in the
industry continued high, and sales remained of favorable volume in both
spinning and weaving mills.






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- 10 -


August-September net imports of all cotton spinning material were
.45,110 metric tons or equivalent to 208,000 bales of cotton of 478 pounds
compared to 59,542 metric tons or 275,000 bales in August-September last
year. Imports of raw cotton alone amounted to 30,654 tons or 141,000 bales
as against 47,070 or 217,093 bales last year. Of the August-September 1936
total for cotton, the United States supplied 9,000 bales of 478 pounds(last
year 4,500 bales), India 19,700 bales (23,600 bales), Egypt 19,200 bales
(25,000 bales), Brazil 39,346 bales (77,800 bales), and Peru 25,860 bales
(37,900 bales). It is credibly reported that total stocks of raw cotton
in the country are very low, despite some recent slight increase in Bremen
holdings.

The tension in the raw material situation is further emphasized by
recent ordinances aiming (1) at a reduction of requirements for natural
fibers, and (2) at assisting in the sale of mixed substitute goods. The
increased admixture of 16 percent of staple fiber to ordinary counts of
cotton yarn, reported in our Cotton Report of August 10, took effect on
November 1. A decree of the currency authorities of October 26 has subject-
ed cotton yarns of all kinds to special import buying permits, also effective
November 1, and a decree of the Supervisory Office for Cotton, of October
27, has placed reclaimed cotton under production control quotas. Previously
such production quotas were applied to the utilization of raw cotton and
cotton waste. The purchase and allocation of staple fiber to individual
manufacturers has also been placed under .supervision, since the present rate
of cell-wool production is not yet adequate to cover the growing require-
ments. Finally, a decree of October 28 made very high admixture of rayon
and staple fiber compulsory for textiles to be delivered to public
organizations and institutions.

In the same way, a recent agreement between the textile industry and
the retail trade, as well as tailors' organizations, provided that designation
of textile materials as "pure", "guaranteed" cotton (or wool), "mixed cotton",
or as of "foreign origin" is prohibited. "Cotton goods", hereafter, may vary
from pure cotton to 20-25 percent artificial fiber or other substitute. The
effect of these decrees, coming on top of those already issued, is to
accelerate the replacement of natural fibers by artificial fibers and other
substitutes. Nevertheless, it is known that manufacturers are doing their
utmost to maintain the quality of their products, particularly those where
quality is of major importance, in order to forestall, as much as possible,
consumer opposition to "substitutes",

Czechoslovakia.- The improvement recorded by the Czechoslovakian
cotton textile industry in recent months has been fairly well maintained in
September and October, though export business suffered from the return of
Italian competition in Southeast European markets,

Austria.- The general level of cotton mill operations in Austria is
still very satisfactory, though somewhat below last year. The substantial
decline experienced in Austrian cotton mill occupation in the summer, as
a result of the contraction in yarn business to Rumania, has given way to
some recovery in September and October. Sales and deliveries to Rumania are
reported to have picked up again. Austrian cotton yarn exports, however,
face the threat of much increased competition from the resumption of Italian
offers in southeastern Europe.





- 11 -


France&- Active business in yarns and cloth at strongly rising prices,
as well as good increases in mill occupation, have followed the devaluation
of the franc and characterized the entire month of October in France. The
French cotton industry seems hopeful both because of much improved prospects
for beneficial internal economic policies and the likelihood of some gains
in exports. The outlook is dimmed only by fear of further increases in
costs of production.

Italy 2/.-The devaluation of the lira and the hope that 'this step
will lead to a generally improved foreign exchange position, apart from a
resumption and increase in the exportation of cotton goods in particular,
have given rise to an expectation among importers and spinners of improved
possibilities for raw cotton imports and cotton mill activity in 1936-37.
Nevertheless, the outlook does not seem too favorable, and continued small
utilization of raw cotton by Italian mills is to be expected.

To keep the mills occupied at the rate of 4 working days per week -
which seems to be taken as a base for operations in the current cotton year,
it is indicated that the cotton textile industry must be supplied annually
with.120,000 metric tons of raw material. This is the equivalent of
550,000 bales of 478 pounds net. The Italian authorities are reported
willing to allot the industry in 1936-37 this much raw material, but only
about two-thirds of it in the form of imported cotton. Fully 30 percent
of the indicated total is to- consist of domestic fibers, such as staple
fiber (cut rayon), cottonized hemp, etc. This would leave only about
400,000 bales of cotton to be imported, as against a spinning mill consumption
of raw cotton in Italy of 780,000 bales in 1934-35, 860,000 in 1933-34, and
1,017,000 in 1928-29. It appears, however, that the way is left open for
increasing raw cotton imports in proportion to any improvement that can be
achieved in cotton goods exports. This may somewhat raise the low indicated
figure of 400,000 bales, most of which are to go into manufactures for
export and for consumption in the Italian colonies and possessions. It
appears that only a small fraction of domestic requirements will be covered
with imported cotton.

Russia.- Production of cotton fabrics by enterprises of the Light
Industry amounted to 242,000,000 yards in September this year, compared with
223,000,000 yards in 1935 and 195,000,000 yards in September 1934. Total
production of those enterprises during the first tree quarters of 1936
amounted to 2,120,000,000 yards compared with 1,630,C'C,0CC yards in 1935
and 1,696,000,000 yards in 1934.

Mill activity in Japan and China high

Japan 3/.- Mill takings of all kinds of cotton in August and
September were more than double takings in August and in September a year
ago. It is reported that the very sharp increase in mill takings was due
to the desire of mills to take remaining supplies of old crop cotton in
anticipation of some rise in cotton prices. Takings were far above mill

2/ Based upon a detailed report by Consul General G.K. Donald, of Milan,
dated October 23, 1936.
3/ Prepared largely from a cable from Agricultural Commissioner Pawson at
Shanghai under date of November 12, 1936.





CS-1
12 -

consumption for the month, although mill activity and cotton consumption
were maintained at a high level. Yarn production in September was 290,415
bales, a record high for the month, and the output of 298,386 in October
was the highest for any October on record with the exception of 1934. The
necessity of maintaining a large volume of cloth exports and the increasing
barriers erected against Japanese goods by importing countries are reflected
in the increasing degree to which exports are being regulated by trade
organizations with the sanction and support of the Japanese Department of
Commerce and Industry. September and October saw a general tightening of
the control of cotton cloth exports by "trade guilds". This was especially
true of exports to Hong Kong, Netherlands East Indies, and the Straits
Settlements. Exports of cotton cloth in September totaled 224,000,000
square yards as compared with 223,000,000 in September 1935, decreases in
exports to British India and to Egypt and Africa being offset by larger
exports to Manchuria and Kwantung, China and Hong Kong, and the Dutch Indies.

American cotton represented a comparatively small proportion of total
Japanese imports during September. American cotton was in fourth place
with the smallest monthly import figure for more than 10 years, while
imports of the principal competing growths were well maintained despite the
fact that September usually is the least active month for cotton imports.
Imports of all the main growths, with the exception of Chinese, declined as
compared with August but, except for American, were considerbly higher than
in September 1935. Notwithstanding the very small imports of American
cotton, the comparatively large exports of cotton from t-he United States to
Japan in September and October indicate that Japanese imports of American
cotton will show a substantial recovery in October, November and possibly
December.

While imports of Brazilian cotton in the 12 months ended July 31,
1936 were much larger than in any previous year and while both Japanese and
Brazilian interests undoubtedly are desirous of increasing the consumption
of Brazilian cotton in J, .an, it must be remembered that the very large
imports of Brazilian cotton within the last few months are, in part, a
reflection of the fact that the marketing and exporting season for the cotton
of southern Brazil is concentrated in these few months. It is estimated that
Japanese inmorts of Brezilion cotton in the 12 months ended September 30
amounted to about 200,C,0& bales. It is claimed that most of this cotton
was slightly longer in staple than the American cotton imported, but that
in general the ,rade was inferior and the cotton was not so satisfactorily
gratleld nr. a .sorted. Japa nse spinners are said to prefer cotton from
southern Brazil to that from northeastern Frazil. Japanese farmers and
laborers grow an important part of the crop in southern Brazil and increasing
quantities of it are handled by Japanese merchants. Possibly this is one
reason why cotton from southern Brazil is preferred by Japanese spinners
and it is also possible that the large Japanese interests in southern Brazil
will grow cotton which conforms more closely to the needs of the Japanese
cotton industry. 4/ While the competition of Brazilian with American cotton
in Japan can not be dismissed as of no importance, the improved position of
Indian cotton in Japanese consumption during the la-t few months probably
constitutes a more serious threat to American cotton than does the recent
extensive use of Brazilian.

47 See Brazil, under Acreage, Production, ant Crop Conditions.







According to official import statistics, imports of American cotton
of 27,000 bales in September were less than half as large as imports in the
corresponding month of 1935. Imports of Indian cotton were 135,000 bales
or nearly 2- times as large as imports in September 1935. Takings of
Egyptian and Chinese of 5,000 and 7,000 balest respectively, showed little
change from the corresponding month last seasons Imports of all other
varieties totaled 80,000 bales or nearly 7 times the September 1935 volume.
According to trade figures, a considerable part of this last category con-
sisted of Brazilian with smaller quantities coming from Peru, Mexico,
Argentina, and Africa.

China 5/.-The condition of the Chinese Cotton Textile Industry
continues to improve. The yarn market is firm and spinners' margins are
the highest in recent years. It is reported that Japanese and some of the
Chinese mills are carrying a large volume of unfilled orders, and yarn sales
are expected to be large for the next few months. Mill activity was appre-
ciably greater in October than in August and September, and materially
greater than a year earlier. Japanese spinning interest are expanding in
North China, and it is believed that part of this expansion is taking place
in anticipation of a larger production of raw cotton in that area.

Imports of cotton were very small in September, amounting to less
than 10,000 bales. Imports in the 12 months ended September were 179,000
bales as compared with 272,000 bales in the preceding 12 months. Most of
this decline in total imports was accounted for by decreased imports of
American cotton which amounted to only 51,000 bales in the latter period
as compared with nearly 136,000 in the earlier period. Deliveries of all
kinds of cotton to Shanghai mills were-185,000 bales in October or 68 per-
cent more than in October 1935. Deliveries of Chinese cotton amounted to
177,000 bales. Deliveries of American were nil, and of Indian, Egyptian,
and miscellaneous growths 1,000, 1,000, and 6,000 bales, respectively.

On the basis of present price relationships, Chinese cotton must
decline about 8/1C of a cent per pound if exports of cotton from China are
to be stimulated to any important degree. In view of the present brisk
demand for cotton by the Chinese industry, it now appears doubtful that
exports of from 300,000 to 400,000 bales which were anticipated in previous
reports will actually materialize.

World Production in 1936-37 Largest in History Acreage and
Production at Record Level in Most Foreign Countries

World.- Present indications are that the total world production in
1936-37 will be about 29,900,000 bales. Should world production turn out
to be this large, it will constitute a record high, the largest crop of any
previous year being 28,400,000 bales in 1926-27. On the basis of the
November report, the American crop will represent 41.5 percent of total
world production in 1936-37 compared with 63.3 percent in 1926-27 and an
average of 56.3 percent in the 10-year period ended 1932-33. The larger
part of the prospective record high foreign production of 17,500,000 bales
will not move into trade channels until January and after.

5 Prepared largely from a cable from Agricultural Commissioner Dawson
at Shanghai under date of November 14, 1936.


- 12 -






1 -
CS-1
United States.-A United States cotton crop of 12,400,000 bales was
forecast by the 'Crop Reporting Board', based upon conditions as of November 1.
This is an increase of 791,000 bales over the forecast as of October 1 and
compares with an actual crop of 10,638,0u0 bales in 1935 and an average of
14,414C,000 bales in the 10 years 1923-24 to 1932-33. *The indicated average
yield per acre is 199.7 pounds compared with 186.3 in 1935 and the 10-year
average of 169.9 pounds. The increase in prospective outturn results from
fall weather that has been almost ideal for the maturing and the picking of
the crop.

Egypt.- The harvesting of the Egyptian has progressed rather rapidly
and the quantity picked by the end of October exceeded that picked to the
same date last year by 15 percent. Picking weather was favorable in general,
although in some of the southern sections of Upper Egypt, excessive heat
forced maturing too rapidly in the early stages of plant growth, with the
result that all bells opened at once and.the resultant grade of the cotton
was poor. This factor has contributed to making the grade of Uppers some-
what lower this season than in most years. The ginning outturn was very
high early in the season, but by October had become about normal. Up to
the first of Novemberr, 786,000 bales of all kinds of Egyptian cotton,
including Scarto, had been ginned. This is an increase of 15 percent over
innings to the same date in 1935-36. Ginnings of Sakellaridis wete some-
what smaller than last season. As was stated in the last issue of Cotton
Prospects, the first estimate of the Egyptian production in the 1936-37
season is for a crop of 1,947,000 bales of 478 pounds net, a record high
production and 10 percent larger than 1935-36.

Brazil 6/.-No official estimate is available on cotton acreage for
the 1936-37 season in southern Brazil. However, what scanty information
there is available makes it seem probable that acreage this season will
show a further incrrnse. It ws stated in August by an official of the Sao
Paulo Cotton jErchcnge that the acreage to be planted in 1936-37 in Sao Paulo
would be 10 to 15 percent gre:,ter than that for 1935-36, instead of the 25
to 30 percent increase thnt was anticipated early in the summer. This fore-
cast does not agree with those of men who have recently returned from the
interior cotton centers, and neither does it rgree with statements made by
many cotton growers during August. It is said to be the opinion of these
latter groups that the 1936-37 cotton acreage will be from 2C to 30 percent
greater than last year's acreage, and with average weather the increase in
total yield should be about the same as the increase in acreage. Cotton
growers state that the weather in the 1935-36 season was no better than
average.

It is reported that there was availablefor distribution at seed ex-
purgation stations on July 31, 1936 about 28,700,000 pounds of seed as
compared with 33,C00,000 pounds of seed actually distributed throughout the
entire planting season last year. Information regarding the seed on hand on
July 31, 1935 is not available for purposes of comparison but it is known
that it was much less than was available on the corresponding date this year.
For that reason it appears that the State Secretariat of Agriculture in charge
of seed expurgation is expecting that a much larger quantity of seel will be
distributed this year.

6/ Prepared largely from a report from Carol H. Foster, America- Consul
General, Sao Paulo, mnder date of October 3, 1936.





CS-1


- 15 -


The sharp increase which took place last season in exports of Brazilian
cotton to Japan and the indicated interests of both Brazilian farmers and
Japanese spinners in increasing the consumption of Brazilian cotton in Japan
make of interest and probably of some significance the report that a con-
siderable share of the cotton crop of southern Brazil is grown and handled
by Japanese. According to statements made at a Cotton Congress organized
last year by members of the Japanese colony in Sao Paulo, the Japanese colony
produced 450,000 bales of cotton in the State of Sao Paulo in 1935-36 which
was approximately 60 percent of the total crop of the State, and that Japanese
farmers produced about 31 percent of total 1935-36 Brazilian cotton crop.
According to the report of the Congress, Japanese had under cultivation that
season 797,600 acres of cotton in the State of Sao Paulo. The Japanese are
becoming increasingly interested in the ginning and merchandising of the
crop. It is reported that one firm imported a number of American cotton
gins and in c addition purchased some existing gins and that it was expected
that a total of 60,000 bales of cotton will be handled by these gins in the
course of a year. It was stated that Japanese spinners owned stock in
this particular firm and that it has connections with important cotton
merchants in Japan. American cotton firms have pointed out that the establish-
ment of a large Japanese firm in Sao Paulo will undoubtedly facilitate the
marketing of Sao Paulo cotton in Japan. In addition to providing for a
supply of cotton suited to the needs of Japanese spinners, the close
connection between the Japanese concern and Japanese spinners will enable
Brazilian merchants to get Japanese quotations on Brazilian cotton at any
time of the year.

Should the 1936-37 crop in southern Brazil show a significant increase
over last season the total 1936-37 Brazilian crop will likely exceed the
record crop of 1935-36 since the current crop in northern Brazil is now
estimated (by the Brazilian Government) to be approximately the same as in
1935-36. The present tentative estimate of the total 1936-37 Brazilian crop
being used by the Bureau of Agricultural Economics is 1,8CO,CCO bales compared
with a crop of 1,700,000 bales in 1935-36 and an average for the 1C years
ended 1932-33 of 500,000 bales.

Russia.- The cotton procuring campaign has been proceeding actively
with almost three-fourths of the total ple.n reported executed by October 20.
This is somewhat ahead of last year, when about 65 percent of the plan was
carried out by the same date. In view of the fact that this year's procuring
plan is fixed at a considerably higher level than the record crop of 1935,
this means an increase in procurings to October 20 of some 595,0C0 equivalent
bales of ginned cotton, or an increase of about 30 percent, as compared with
last year.

The chief cotton procuring region of the Union, Usbekistan, reported
full execution of its procuring plan on November 1. This is about a fort-
night earlier than in 1935 and 40 days earlier than called for by the
Government plan. The equivalent of about 1,544,00C bales of ginned cotton
were delivered in Usbekistan by November 1, as compared with 1,26C,(&C b;:les
in 1935. The share of high-grade cottons has also increased slightly, and
29 percent of all cotton delivered has been reported classified as excellent,
against only 5.8 percent a year ago. It is reported, moreover, tint trere
is still considerable cotton in thefields in Usbekistan, and efforts nre
being made to secure an additional 230,000 bales of cotton in order to attain
this year, the figure provided for by the end of the second 5-yt'ar plan, in
1937. The percentage of Usbekistan areas harvesting 1,000 pounds and rmre







- 16 -


C3-1


of un.inned cotton per acre is reported increasing steadily, this yield
havi-:: been obtained on only 3.4 percent in 1934, on 23 percent in 1935,
and on 45 percent this year.

Turk'menia and Tadjikistan, as well as Kirgesia and southern Kasakstan
have also reported execution of their procuring plans at an earlier date
than a year ago, with cotton procurings in excess of those last year.

Although these reports from Russia indicate that the current crop
will exceed 2,500,00c bales this figure is still being used as the tentative
estimate because of the tendency in recent years for the final estimates
to be considerably smaller than the early reports indicated. This figure
which array later be revised upward is considerably larger than the estimated
production for any other year in history and 125 percent larger than the
average production in Russia during the 10 years ended 1932-33.

China.- Recent reports indicate that the current Chinese crop will
probably be fully as large as the 3,650,000 bale estimate previously reported.
This figure is 1,000,000 bales larger than the 1935-36 Chinese crop and
500,000 bales larger than the previous record crop of 1934-35.

India.- The area under cotton in the Punjab on October 1 was
3,490,000 acres compared with 2,912,000 in 1935-36, an increase of 20
percent. Cron conditions, reported as 97 percent of normal, indicated the
probability of a high yield per acre. ,Mich of the cotton produced in the
Punjab is grown under irrigation and consists of American Upland varieties
or of special types developed from American varieties.

Argentina.- The land was being prepared for cotton in September
throughout most of the major cotton producing areas in Argentina. It is
believed that acreage will show a considerable increase over last year's
record high. Cotton acreage and production in Argentina in 1935-36 amounted
to 783,354 acres and 353,800 bales, respectively. In the 5-year period
1928-29 to 1932-33 an annual average of 145,000 bales were harvested from
308,000 acres.

Uganda.- Cotton acreage planted up to September was estimated to be
1,306,000 acres or 12 percent above acreage planted up to the corresponding
date in 1935. This early sown cotton was in good condition and favorable
weather indicated the likelihood that total acreage planted this season would
exceed last year's record acreage. Ugandian cotton production in 1935-3f
amounted to about 266,r ', bales, and averaged 171,4c0 bales in the 5 years
1928-29 to 1932-33.





able 1.-Cotton: ,merican, foreign and all ,rowths; production, carry-over, and supply, exports from United States,
and rice at 10 spot markets in United States, 1920-21 to date


10 yr.av. :
1923-24 t3:
1932-33 : 8,215 14,414 3,.37 6,022 20 36
.93-3- : 7,964 13,049 3,531 11,588 2-,637
34-35 5,037 9,63b 7, c48 10,6 34 2 ,2O70
935-3 1/ : ,267 10,638 7,138 ?,009 10,047
230-37 I/ : 12,4-0 5, .24 7 .. ,00 190,400
xorts cnmiriled from reports of the Bureau of Foreign and


16.53 11,196 4,156
10.81 15,051 4,539
12.36 14,164 5,602
11.55 15,362 4-,803
17,500 __ 5,200
Dome stic Commerce.


15,352
18,190
19,766
20,GG5
22,700


25,610
206,700
23,800
20,5-00
29, 000


10,178 55,788
1C,127 .-2,827
16, 236 40,036
13,812 40,312
12,200 -.,100


prices bhsed en daily telcgrams received from cach of the 10 designated spot r-.rkets.
rtdActiin, carry-o-er and supply estimates of the Bureau of Agricultural Economics, based
from rer~rrts -f official -:overmunntal agencies or from reliable trade sources.
/ Prcliin.ry.


on data compiled


Amierican Foreign : All kinds
eason : : : Crry-over :: Price : : : : : :
eginni: : : :beginni:-g of season: :per lb. : Produc-: Carry-: : Produc-: Carry- :
Aug. 1 :axports:I-roduc- :United : : Supply: 10 : tion : over : Supply: tion : over : Supply
ticn World
.....: ticn) _: -t tes: World : r c ..: ... .. ... .. ..... t: s-.. _
:1,0)0 1,3JO 1,0o0 1,000 1,0.0
:bales bales running 1,000 1,000 bales 1,000 1,000 bales 1,000 1,000
:500 lbs.:7S lbs. bales bales b..1.s Tents 478 Ibs. bales bales ?'8 lbs. bcles bales
920-1 : 5,973 13 ,49 3,279 9 338 197 16.6 7,378 4,847 12,425 21,007 11,185 32,192
321-22 : ,548 7,9 5 6,361 9,393 17,338 18.09 7,-39 4,401 11,893 15,-34 13,797 29,231
S922-23 : ,007 9,7.5 ,3C5 5,162 11: ,17 25.33 9,507 4,492 13,993 13,262 9,654 ,16
923-24 : 5, 15 10,140 2,129 3,304 13,444 30.14 9,565 3,578 13,133- 19,695 b,882 26,577
24-25 : 8,240 13,630 1,439 2,705 16,335 24.22 11,500 3,311 14,611 24,030 6,016 30,946
25-26 : 3,267 IC,1 i 1,504 3,386 12, 91 19.30 11,826 3,507 15,393 27,931 6,9b3 3,884
926-27 : 11,299 17,978 3,414 ,4-15 23, 73 14.40 10 ,39 4,014 14,453 28,417 9,509 57,926
927-28 :7, 657 12,956 3,663 7,616 20, 52 19.72 11,075 3,979 15,054 24,C31 11,675 35,706
S28-29 : 8,41K 14,- 17 2,-26 5,114 13 591 13.67 12,236 4,572 lb,6,53 26,763 9,6i6 38,49
929-g :) 7,035 14,825 2,130 4,409 19,234 15.79 11,846 4,600 16,446 26,671 9 ,l9 35, 80
930-321 7,135 13,032 -1,322 6,297 20,210 9.61 12,189 5,030 17,219 26,121 11,517 37, 38
31-32 : ,193 17,097 5,263 8,368 25,65 5.89 10,499 4 ,38 15,357 27,596 13,706 41,302
232-33 : 8895 13,003 9,580 12,960 25,963 7.15 10,937 X,071 15,003 23,9.:0 17,031 40,971






Table 2.-Cot-


rts, supply, and consumption at specified locations,
a date *

World supply, be- Consumption in
ginning of season : foreign countries


atio Aieri-: All :Ratio :Ameri-. All :Ratio
can :growths: can ;,rowths:

Actual actual -


Per




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