The world cotton situation for 1998/99 is characterized by much lower production and consumption. U.S. production is down sharply due to lower planted acreage, higher abandonment and lower yields relative to last year. Weak global demand, substantial foreign stocks outside China, and the prospect of large exports by China have reduced current U.S. prices to their lowest level in more than 5 years, despite the short U.S. crop. Prospects for 1999/2000 include a modest recovery in world demand, intense competition for world trade, higher production in the U.S. and higher U.S. ending stocks.