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The marketing loan provision of the 1985 Farm Legislation for cotton is sending economic signals around the world. For the 1986 season, these signals point to increasing world trade, reducing foreign acreage and production, and expanding consumption. Because of reduced stocks and increasing usage, the global cotton market is experiencing a remarkable price recovery from the low levels in mid-1986. The higher price is expected to substantially reduce future government program costs. The new cotton program is working better than many policy makers anticipated. Cotton disappearance in the U.S. during the 1986 season may be around 14 million bales, a sharp increase from the 8.4 million the year before. This is the largest offtake, except for 1979, in 20 years. Foreign production for 1986 may drop some 10 million bales below consumption. That is the largest production deficit in many years, and opens the door for exporting a large amount of U.S. cotton. Rising foreign consumption is pushing world cotton trade to higher levels. Thus, prospects for maintaining U.S. cotton exports near levels prior to 1985 for the rest of the decade are good. Lower interest rates and a weaker dollar are further boosting exports. |
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©National Cotton Council, Memphis TN |
Document last modified Sunday, Dec 6 1998
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