Cotton updated World Markets and Trade
The last 12 months have seen a substantial change in expectations about global cotton supply and demand. The chart above shows how USDA forecasts for 2016/17 ending stocks have developed since the first forecasts made during USDA’s February 2016 Outlook Forum
Forecasts for global cotton use have risen from 110.5 million bales to 112.5 million bales, with most months seeing increases. Production forecasts, however, while varying throughout the year with a trough in August of about 102 million bales, are presently roughly equal to where they were in February 2016, at 105.4 million bales.
For China and the rest of the world, production forecasts have followed a similar, U-shaped forecast pattern: high initial forecasts, lower during the middle of the season, and higher forecasts made in recent months. However, for cotton use, China and the rest of the world have had markedly different trends. Forecasts for China’s use have been raised five times out of the ten WASDE reports from May 2016 through February 2017 and have never been lowered. On the other hand, cotton use outside of China has been cut eight times out of ten (although this month’s forecast is raised, led by India, Vietnam, and Bangladesh). While forecast use within China has ultimately been raised versus USDA’s 2016 Outlook forecast of about 33 million bales to over 36 million bales in this February’s WASDE, forecast use for the rest of the world has been reduced from 77.5 million bales to 76.3 million.
As a result of these changes, as well as some back-year revisions, forecasts for China’s ending stocks fell sharply during the first part of the marketing year but have since stabilized. Meanwhile, even as forecast ending stocks in the rest of the world were roughly stable for the first part of the year, recent WASDE reports have generally been above the February 2016 forecast level of ending stocks outside of China, a factor that will impact supply and demand going into 2017/18.
For 2016/17, global use is raised, while production and trade are raised only marginally, resulting in lower global ending stocks. U.S. exports are raised, reducing U.S. ending stocks. The U.S. season-average farm price forecast is raised 2 cents to 69 cents/pound.
For current prices received by farmers click here; NASS farm price
Trade Outlook 2016-17
• Vietnam is boosted 200000 bales to 5.2 million on high recent import activity.
• Bangladesh is raised 150000 bales to 6.6 million on strong nearby demand.
• South Korea is cut 100000 bales to 1.0 million on low recent shipments.
• Pakistan is increased 100000 to 2.6 million on tight domestic supplies after disappointing recent crop arrivals.
• Turkey is reduced 100000 bales to 3.6 million on low recent shipments.
• United States is boosted 200000 bales to 12.7 million on high recent shipments and sales.
• Australia is up 100000 bales to 4.1 million on high out-of-season shipments.
• Uzbekistan is down 200000 bales to 1.8 million on very weak shipments to major markets.