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Southern Regional Outlook Conference Atlanta, Georgia September 27, 2000 Cotton Situation and Outlook by Carl G. Anderson Professor and Extension Economist-Cotton Marketing Texas Agricultural Extension Service Texas A&M University College Station, Texas 77843-2124
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NextPrevious World Cotton 2000/01 “A” Index is up 11 cents from September a year ago. “A” Index is up 11 cents from September a year ago. Production is the same. Production is the same. Consumption is up 5 million bales. Consumption is up 5 million bales. World stocks are down 7 million bales. World stocks are down 7 million bales. More use, less stocks implies higher prices. More use, less stocks implies higher prices.
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NextPrevious World Cotton Supply and Demand Million Bales
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NextPrevious Economic Issues U.S. has strong economy and dollar U.S. has strong economy and dollar More textile imports More textile imports Asian economies - improving slowly Asian economies - improving slowly Europe weak Europe weak Polyester price up Polyester price up Implies strong demand for cotton Implies strong demand for cotton
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NextPrevious Cotton: World Stocks/Use Vs. “A” Index August 1990 - September 2000
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NextPrevious Cotton: World Production, Consumption, Stocks/Use, and “A” Index
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NextPrevious Foreign Cotton Production, Use, % Stocks/Use and “A” Index, 1980/81-2001/2002
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NextPrevious Foreign Cotton Area and “A” Index
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NextPrevious “A” Index Versus Exporting Nations Stocks to Domestic Use Percent
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NextPrevious China: Production, Consumption, Imports, Exports, and Ending Stocks
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NextPrevious China: “A” Index and Ending Stocks
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NextPrevious Cotton: World Ending Stocks Showing China Ending Stocks, 1990/91 - 2000/01
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NextPrevious China Cotton Supply and Demand Million Bales
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NextPrevious Cotton: U.S. and Foreign Stocks/Use, Nearby Futures, and “A” Index, Aug. 1989/90 - Aug. 1993/94, and Aug. 99/00 - Sept. 00/01
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NextPrevious U.S. Cotton Production, Use, % Stocks/Use and North Delta Price, 1980/81-2001/2002
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NextPrevious U.S. Cotton Domestic Use, Exports, and “A” Index
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NextPrevious U.S. Mill Consumption, Net Domestic Consumption and U.S. Share, 1972-1999
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NextPrevious Cotton Futures: December 1992 and 2000 Settlement Prices
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NextPrevious Cotton Futures: December 1993 and 2000 Settlement Prices
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NextPrevious World Cotton Prices: “A” Index, Nearby Futures, AWP and U.S. Loan Rate
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NextPrevious Weekly “A” Index Versus Nearby Futures Settlement Price
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NextPrevious December 2000 Cotton Futures Settlement Price, U.S. Ending Stocks/Use, and Foreign Ending Stocks/Use
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NextPrevious Net Bale Commitments of Speculative Traders in Cotton Futures Average Nearby Futures Price, January 1, 1994 - September 15, 2000
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NextPrevious World: Historical Supply/Demand Price
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NextPrevious Futures Prices September20, 2000
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NextPrevious Pricing Strategies Puts for price insurance Puts for price insurance Buy puts, sell out-of-the-money calls Buy puts, sell out-of-the-money calls Forward contracts - problems with deep discounts, financial security Forward contracts - problems with deep discounts, financial security Join marketing association or gin pool Join marketing association or gin pool
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NextPrevious Keys to Profitable Cotton Industry Industry teamwork Technological advances Production costs under 65 cents/lb. Risk versus alternative crops Increase yields/acre Reduce cost/pound Producer performance accounting Expand world demand
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NextPreviousSummary 2000/01: Less world supply More use Higher price 2001/02: World production near use U.S. production more than use U.S. supply up Price implications: “A” Index = 65-75 cents ? December ‘01 futures = 62-72 cents ?
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