COTTON * World cotton use is projected to exceed output during 1989/90, marking the fourth consecutive year of global production shortfalls. The exceptionally strong cotton demand of recent years is continuing this season, with mill consumption projected at a record 85.4 million bales, more than 6 million above production. By the end of this season, stocks are expected to be worked down one-fifth to 25 million bales, which would be only about one-half the record level of 1985/86. Stocks are the tightest in several years in a number of countries including China, the world's leading cotton producer and consumer. * Global cotton trade is holding at a relatively high level of 25 million bales this season because of the strong cotton demand. Exports are off a projected 2 percent from 1988/89's near-record level, reflecting slightly smaller use and import demand from major importing countries. With tight supplies abroad, the U.S. export share is improving to 31 percent, nearly 7 percentage points above last season when U.S. prices were not as competitive. * The 1989/90 U.S. cotton outlook is highlighted by strong domestic and export demand, a smaller supply, and sharply reduced stocks. Reduced acreage dropped the crop one-fifth to 12 million bales. At the same time, strong demand and competitive prices boosted mill use and exports by 5 percent and 25 percent, respectively. This season's ending stocks are placed at 3.5 million bales, about one-half the beginning level and below the 4-million-bale target in current legislation. SUGAR * World sugar production in 1989/90 is forecast at a record 105.7 million metric tons, raw value. Global consumption is also expected to be record high at 108.1 million metric tons, which will continue to trim stocks for the fifth consecutive year, to about 18.2 million metric tons. * The global stocks-to-use ratio has dropped from 29 percent in 1984/85 to a forecast 17 percent this year. World sugar prices have risen from monthly lows of 3 cents per pound in mid-1985 to over 14 cents currently. Further price strength in first half 1990 hinges mainly on decisions by the largest sugar importers--the Soviet Union and Mainland China. Price strength in second half 1990 will depend largely on 1990/91 world output/use prospects. * Domestic sugar production is estimated to decline to 6.6 million short tons, raw value, in calendar 1990, 1 percent below last year's level. Fifteen percent lower beet acreage in California, plus adverse weather in other large producing states, has lowered sucrose recovery rates and will hold U.S. beet sugar output to an estimated 3.6 million short tons, about 6 percent above last year's drought-reduced level. Unexpected severe mid-December freezes in Florida and Texas dropped the U.S. mainland cane sugar crop by nearly 200,000 short tons. U.S. cane sugar output, including Hawaii, is estimated at 3.0 million short tons, down about 8 percent from last year. * U.S. sugar consumption in calendar 1990 is expected to increase modestly for the fourth straight year to 8.4 million short tons, raw value, following 10 years of decline as high fructose corn syrup (HFCS) replaced sugar in soft drinks. * With lower U.S. production and larger consumption, the U.S. sugar quota was raised 325,000 metric tons, raw value, effective January 18, 1990, to 2,849,325 tons, for the 21-month January 1989/September 1990 period. * U.S. sugar prices averaged 22.8 cents a pound in calendar year 1989, slightly above 1988. Wholesale prices of refined beet sugar, reflecting the shortfall in domestic sugar production, averaged 29.3 cents a pound, up 15 percent from 1988. * Domestic HFCS prices fluctuated seasonally during 1989, and for HFCS-55 (the dominant HFCS) averaged 15 percent above 1988. U.S. consumption of HFCS increased less than 1 percent to an estimated 5.95 million tons, dry basis, in calendar 1989, compared with less than 2.1 million tons in 1980. |