Exports and 2002 Crop Size Key To Cotton Price Outlook. The US will set a record for cotton exports this year. USDA's currently estimates that exports will total 10.3 million bales this crop year that ends July 31. Recent weekly reports suggests, however, that exports may actually total close to 11 million bales.
US mill use of cotton has declined to only 7.3 million bales but thanks to exports , total off-take (US mill use plus exports) is expected to total 17.6 million bales. This is actually 12% above last year and the highest total off-take since 1997. Of course, US cotton prices have been very cheap and foreign mill demand good and this has helped boost exports.US cotton acreage is expected to decline in 2002. The US crop could still,
however, come in at 17 to 18 million bales. This could be enough to keep prices
in the 40-50 cent per pound area depending on demand. With the decline of the
US mill industry, strong exports will again be needed to avoid a buildup of
stocks.
Final provisions of a new farm bill, if passed, are not yet known. Particularly because of the US's increased dependence on exports, US prices cannot track far from the world price or A-Index. The A-Index and US loan rate together determine the POP or LDP payment, if any. For the 2002 crop, total money (cash plus LDP or loan plus equity) is expected to again be 55-60 cents per pound- similar to last season.
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