On December 9, 2005, the USDA's 2005-2006 estimate of U.S. ending stocks increased from 6.50 to 6.90 million bales. They are estimating production at 23. million bales and total use of 22.40 million bales, putting the ending stocks to use ratio at 31%, the most in four years. Worldwide, 2005-2006 production is estimated at 112 million bales and usage at 115 million bales. The 2005-2006 world ending stocks are estimated at 51 million bales, down from 52 million bales the previous year.

Overall, cotton prices have been falling, pressured by increased world production. Domestic mill use in November decreased from an annual rate of 6.06 to 5.93 million bales. In 2005-2006, the USDA is counting on exports to increase 14% and so far, they are up 59%.

The 2002 farm bill gave growers a 52 cent loan rate for six years, but this market needs better public policy. The World Trade Organization agreed with Brazil in saying that U.S. cotton subsidies are illegal and need to be reduced. Brazil pointed out that in 2001 and 2002, $4 billion of subsidies were paid for a $3 billion crop. On July 5, 2005, the White House sent a proposal to Congress to eliminate the export subsidies.

World (cotton) production is slightly higher, as increases for the United States, Pakistan, Australia, Syria, and Burkina Faso more than offset reductions for India, Turkey, and others. Consumption is raised mainly in China, based on recent yarn production.

USDA's World Ag Supply & Demand Estimates. December 9, 2005.