Report Highlights: The Government of Spain (GOS) successfully challenged the European Commission's (EC) cotton reform, but until the EC has a “revised” reform in place, Spanish cotton producers have had to make operating decisions based on the original “reform.” Their resulting production decisions will help to mitigate the otherwise declining import demand and substantially reduce exportable supplies. (LR20SH3)
Executive Summary While we forecast that Spanish Marketing Year (MY) 2006/07 (August/July) raw cotton imports will be up slightly (10,000 metric tons (MT) vs. 8,000 MT in MY 2005/06), we expect a drop of about 20,000 MT in the year-to-year cotton exports (44,000 MT for MY 2006/07 vs. 64,000 during MY 2005/06).
Of the import total, we expect just over 1,000 MT will be of U.S. origin, consisting primarily of upland cotton, San Joaquin Valley, and some PIMA.
While only a slight upward import tic from last year's imports, had it not been for the EC's cotton reform, imports would have likely decreased yet again, and exports would likely have remained considerably higher than our current forecast.
Production Policy · The Revised EU cotton Policy, instituted under EU Reg. 864/2004, dated of April 29, 2004, came to effect on January 1, 2006.
· As of MY 2006/07, cotton producers are eligible to direct EU subsidy payments determined on the basis of historic cultivated areas and yields and EU supports to the sector.
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