The University of Tennessee - Agricultural Economics

April 9, 2008

This first look at the cotton 2008/09 marketing year portrays the continuing trend of fewer U.S. acres and lower production. Prices have responded to this expected drop in production, but so far ending stocks have remained at near record levels due to sluggish worldwide demand. There is a lot of uncertainty in projecting production and use this early in the year, and these projections will likely change significantly. But the expected scenario drops ending stocks by over4 million bales in the U.S. Even with that drop, supplies are plentiful. That is why I think prices look higher late this year or next year. That said, price protection at the current level on a portion of this year’s expected production should be considered.

	2003/ 2004	2004/ 2005	2005/ 2006	2006/ 2007	2007/ 2008	Low Carryover Scenario 2008/09	Expected Carryover Scenario 2008/09	High Carryover Scenario 2008/09
Supply						- - Projected for 2008/2009 - -
Acres Planted (million acres)	13.5	13.7	14.2	15.3	10.83	8.89	9.83	9.89
Acres Harvested	12.0	13.1	13.8	12.7	10.49	7.91	8.36	8.80
U.S. Average Yield (lbs/acre)	730	855	831	814	888	825	850	875

Beg. Stocks (million bales)	5.38	3.45	5.50	6.05	9.48	9.70	9.70	9.70
Production	18.25	23.25	23.89	21.59	19.4	13.6	14.8	16.0
Imports	0.05	0.03	0.03	0.02	0.02	0.02	0.02	0.02
Total Supply	23.68	26.73	29.41	27.66	28.9	23.3	24.5	25.8

Use
Domestic	6.49	6.69	5.89	4.95	4.7	.	4.6	.
Exports	13.76	14.41	18.04	13.01	14.5		14.5	.
Total Use	20.25	21.10	23.92	17.96	19.2	18.5	19.1	19.8
U.S. Ending Stocks	3.51	5.50	6.05	9.48	9.7	4.8	5.4	6.0
Foreign Stocks	39.5	51.8	54.1	51.7	49.9
U.S. Average Season Price	$61.80	$41.60	$47.70	$47.30
Supply and Demand Projections and Historical Data Source: USDA

For more information contact Delton C. Gerloff

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