ONE PAGE SUMMARY

World cotton production in 2004/05 is estimated at a record of 25.2 million tons, an increase of 4.5 million tons (22%) from last season. Stimulated by lower prices, mill use is projected to increase by 1.4 million tons (6.5%) in 2004/05 and reach a record of 22.7 million tons.

Despite being lower than in 2003/04, prices were still above 55 cents per pound at the start of 2004/05 when Southern Hemisphere planting decisions were made. Production costs of the more efficient producers in several countries of the Southern Hemisphere, such as Brazil and Argentina, are below 55 cents per pound. As a result, cotton area in the Southern Hemisphere in 2004/05 rose by 9% to 3.5 million hectares, leading to a record crop of 2.6 million tons. Production in Brazil is estimated at a record 1.3 million tons in 2004/05, up 2%, while production in Australia is projected to rebound to 570,000 tons, up 220,000 tons. Production is also rising in Argentina, Peru and Colombia. The average yield in the Southern Hemisphere is reaching 742 kilograms per hectare in 2004/05, up 20 kilograms per hectare.

Declining cotton prices in 2004/05 are expected to curtail plantings in 2005/06. World area is projected to decline to about 33 million hectares in 2005/06, down 2 million hectares. Production is forecast to decline in 2005/06 to 22.9 million tons, down 2.3 million tons (9%), still the second largest crop on record. Declining cotton prices in 2004/05 will stimulate cotton mill use in 2005/06. Mill use is projected to climb to a record of 23.1 million tons, up 400,000 tons (2%), outpacing production by an estimated 200,000 tons.