Gary Adams thinks there's a lot to be said for new beginnings.
Adams made his inaugural presentation as the National Cotton Council's new vice president for economics and policy analysis at an American Cotton Producers/Cotton Foundation meeting in Atlanta July 24.
There were some light comments about the dour economic analyses of “Dr. Doom,” Mark Lange, Adams predecessor, who is now the Council's vice president for policy analysis and program coordination and will become its president and CEO in February.
“I come in starting near the bottom,” said Adams, formerly director of crop program analysis for the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “You road prices down with Mark, and, hopefully, they will start back up with me.”
Adams said the outlook he was presenting at the Atlanta meeting was still “a little on the pessimistic side” because of the ongoing problems with net farm income in the U.S. agricultural sector.
USDA's most recent estimates put 2002 net farm income at $40.5 billion, down from $47.9 billion in 2001. Without significant recovery in farm incomes, government payments for the current calendar year are projected to reach $21.7 billion, roughly the same level as the last two years.
Lower livestock, dairy
“A primary factor contributing to the lower farm income is the decline in livestock and dairy receipts,” said Adams. “In 2001, livestock receipts reached a record $106.4 billion. For 2002, receipts are expected to fall to $99.4 billion. Crop market receipts for 2002 are expected to be virtually unchanged from last year's level.”
He noted that cotton futures prices have strengthened in recent weeks, primarily due to changes in market fundamentals.
“Currently, the world cotton crop is projected at 90 million bales, down 8 million bales from 2001,” said Adams. “Consumption is put at 96.2 million bales. If realized, the combination of the two would bring a significant decline in world stocks.”
Foreign cotton consumption usually exceeds foreign production by 4 million to 8 million bales, he notes, but, in 2002, USDA projections indicate the gap between foreign consumption and production could be closer to 11 million bales. “Longer term, this deficit will be key if the United States is to maintain 10 million to 11 million bales of exports.”
A smaller world crop and growth in mill use would lead to a decline in global stocks for the 2002/2003 marketing year, which began Aug. 1, said Adams. “If current estimates are realized, it would put stocks at levels reminiscent of the early to mid-1990s, suggesting an opportunity to see improved prices for the coming year.”