Jaime Malaga, Ph.D.

Center for North American Studies

Texas Tech University - Department of Agricultural & Applied Economics

Recent Trends in U.S. Cotton and Sorghum Exports and their Impact on the South

Outline

Cotton Price and Exports

Cotton in the South

Cotton Trends and Expectations

Sorghum Price and Exports

Sorghum in the South

Sorghum Trends and Expectations

General Remarks

Cotton Price A Index (Monthly)

0

20

40

60

80

100

120

140

160

'Aug-09 'Oct-09 'Dec-09 'Feb-10 'Apr-10 'Jun-10 'Aug-10 'Oct-10 'Dec-10

Cents/lb

World Cotton Production and Mill Use

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19 2020/21

000 bales

ProductionMill Use

Source: CERI

World Cotton Imports

EU19%

ROW45%

Bangladesh4%

China3%

Indonesia

10%

Pakistan2%

Turkey15%

Vietnam2%

ROW26%

EU2%

Bangladesh10%

China41%

Indonesia5%

Pakistan

4%Turkey

8%

Vietnam4%

2000-01 2010-11

World Cotton Exports

2000-01 2010-11

Uzbekistan14%

U.S.27%

WAC8%Brazil

1% Australia15%

ROW35%

India13%

ROW17%

Australia

7%

Brazil5%

WAC5%

U.S.43%

Uzbekistan10%

Cotton China

0

10,000

20,000

30,000

40,000

50,000

60,000

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19 2020/21

000 bales

Ending Stocks Production Mill Use Imports

Source: CERI

Cotton Mexico

Source: CERI

0

1,000

2,000

3,000

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19 2020/21

000 bales

Ending Stocks Production Mill Use Imports

Factors Affecting Cotton MarketsTable 1 Description of the Variables Used in the Analyses

- Changes in US cotton production

- India cotton export restrictions

- Pakistan flooding

- China Textile Industry Quick recovery

- Exchange rates

- Depletion of cotton stocks

- Inflation in China

US Cotton Production by RegionTable 1 Description of the Variables Used in the Analyses

0

5000

10000

15000

20000

25000

2003/4 2004/5 2005/6 2006/7 2007/8 2008/9

Southeast Mid-South Southwest Other

Southwest (TX)

Mid-South (MS, AR, LA, TN)

Other

Southeast (GA, NC, AL)

US Cotton Forecast?Table 1 Description of the Variables Used in the Analyses

0

5,000

10,000

15,000

20,000

25,000

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19 2020/21

000 bales

Production Mill Use Exports

US Sorghum (Prices) 2006-2010Table 1 Description of the Variables Used in the Analyses

Sorghum PriceGulf Port LA

US Sorghum Production and Exports

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11

000 MT

Production Exports

World Sorghum Exports 2006-2010Table 1 Description of the Variables Used in the Analyses

US

Argentina

75%

65%

World Sorghum Imports 2006-2010Table 1 Description of the Variables Used in the Analyses

E.U.

Mexico 41%

Japan

US Sorghum by RegionTable 1 Description of the Variables Used in the Analyses

Southern States

Total US

Southern Sorghum Production by States (200-2010)

US Sorghum Production by State (South)Table 1 Description of the Variables Used in the Analyses

Factors Affecting Sorghum Export Markets

- US total production and exports declining (long term) Ethanol use increasing

- Most of US exports going to Mexico (Chicken industry)

- Some unexpected demand (EU) may affect flows and prices

- Growing competition from Argentina and Australia

- Potential new markets in Sub Saharan Africa and LA (Colombia, Chile, Ecuador)

Final Remarks

- Cotton-Record high prices will go down and stabilize next year-US exports 75% of its cotton and exports will continue to grow -Southern States account for 90% of US exports-Relative prices of other commodities will be key variables. -Factors to watch: China mill use, Exchange rates, Energy prices, Indian,

Australian and Brazilian exports, WTO Doha round?

- Sorghum -Erratic prices will tend to stabilize and decline-US exports 40% of its sorghum but exports may decrease-Southern States (mainly TX) account for 40-45% of US production-Factors to watch: Mexican chicken industry, competition from Argentina and

Australia, New emerging markets, ethanol industry demand.