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February 1999
Foreign cotton area for the 1999/00 season depends on several factors with cotton prices and those of competing crops playing a crucial role. Domestic and world financial conditions also influence foreign cotton area along with government policies and weather. The Cotlook A-Index represents the price level of international raw cotton offered to the market on a daily basis from several cotton trading countries. Generally, a very strong direct relationship exists between cotton area and this price index for the previous year. During the first six months of the 1998/99 marketing year, the index dropped 12 cents. This factor alone suggests that foreign cotton area next year will drop below the 28.5 million hectares estimated for 1998/99. However, area shifts also depend upon the price level of other crops in relation to the price of cotton, production costs associated with cotton production, and government policies. U.S. agriculture attaches stationed in major cotton producing countries have projected a drop in area for 1999/00.
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