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USDA Cotton: World Markets and Trade


11 March 2012

USDA Cotton: World Markets and Trade - March 2012USDA Cotton: World Markets and Trade - March 2012

USDA’s early season forecast for the 2012/13 marketing year was released at the Agricultural Outlook Forum in late February. World production is projected to fall and consumption to rise.
USDA Cotton: World Markets and Trade Reports

Lower Global Stocks to Pressure Prices

However production is expected to exceed consumption for the third consecutive year, which would raise the world stocks-to-consumption ratio to the highest level in 11 years. Higher stocks would put downward pressure on prices and help support growth in consumption.

However, future developments in two major government policies may constrain any price adjustments and could negatively affect demand, in both 2011/12 and 2012/13. China has just announced a higher reserve purchase price for 2012/13, potentially drawing more cotton into the reserve; the reserve is likely to hold more than one-fourth of total 2011/12 world ending stocks.

Second, India’s recently announced ban on cotton exports has created uncertainty about the quantity available to world markets. Withholding of supplies by the second largest exporter could also support world prices.

Further changes in these two policies, in the two largest markets in the world, will likely have a significant impact on the outlook for both the remainder of this season and next year.

Overview

With world supply marginally up and global consumption down, ending stocks are higher. Trade is raised due to stronger imports by China. U.S. consumption is lowered and ending stocks are higher. The season average price is raised slightly, with the midpoint at 90.5 cents per pound.

Prices

The U.S spot price and the A-Index have shown little direction in the last month and trading volume remains low.

Trade Changes 2011/12

Major Exporters:

  • India is increased 1.5 million bales to 7.75 million on revised reports of export registrations.
  • Pakistan is raised 100,000 bales to 700,000 on a larger crop.
  • Uzbekistan is lowered 100,000 bales to 2.6 million on greater competition.

Major Importers:

  • China is raised by 1.5 million bales to 18.5 million on recent large shipments from India.
  • Pakistan is lowered by 200,000 bales to 1.0 million on a larger crop.
  • India is raised 150,000 bales to 600,000 on tighter domestic supplies.
  • Egypt is reduced by 100,000 bales to 400,000 as domestic use falls.
  • South Korea is increased by 100,000 bales to 1.15 million on stronger imports.
  • Malaysia is increased by 100,000 bales to 600,000 with higher stocks.

Further Reading

- You can view the full report by clicking here.

March 2012

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