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USDA Cotton: World Markets and Trade


12 September 2012

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


USDA Cotton: World Markets and Trade Reports

U.S. Gains Market Share as Competitor’s Exports Fall

After reaching the lowest level in over a decade, U.S. market share is expected to rebound 6 percentage points in 2012/13, principally due to the recovery in U.S. production. World import demand is estimated to be down 19 percent, primarily because China’s reserve policy no longer supports its imports, which are expected to plummet by more than half. Other major competitors, which were the major beneficiaries of China’s large imports last season, will see their combined market share decline significantly as China’s imports fall.

Despite the decline in world trade, U.S. exports are forecast to remain stable. Coupled with the recovery in production, strong growth in import demand in major U.S. markets outside of China and a lower than normal dependence on China last season will give U.S. exports an improved market share.

Conversely, India’s exports are forecast to drop nearly two-thirds on tighter supplies, increased domestic use, and an uncertain export policy. Indian mill demand remains strong given profitable spinning margins and greater demand from China for yarn. Furthermore, India’s recent efforts to constrain exports may discourage prospective buyers.

Despite abundant exportable supplies at the start of the season, exports by Australia and Brazil are expected to decline over 10 percent, due largely to the fall in China’s import demand and stronger competition from the United States and other exporters.

Overview

Global cotton beginning stocks for 2012/13 are raised, while production, trade, and consumption are lowered slightly. U.S. production, exports, and ending stocks are reduced. The forecast season average U.S. farm price remains unchanged at 70 cents/pound.

Prices

The U.S. spot price and the A-Index continue to show little direction as the market awaits signals from China concerning its reserve and import policies.

2012/13 TRADE OUTLOOK

Major Exporters:

  • Australia fell 200,000 bales to 4.2 million on weaker import demand in China.
  • Brazil is raised 100,000 bales to 4.0 million on weaker competition.
  • India dropped 200,000 bales to 3.5 million on uncertainty concerning export policy.
  • United States is down 300,000 bales to 11.8 million on lower import demand in China.
  • Major Importers:

  • China plunged 1.0 million bales to 12.0 million on reduced domestic use.
  • Pakistan jumped 200,000 bales to 2.4 million spurred by greater domestic use.
  • Trade Changes 2011/12

    Major Exporters:

  • Malaysia is up 150,000 bales to 1.0 million on increased transit trade.
  • India is raised 500,000 bales to 10.5 million in response to strong demand from China.
  • Major Importers:

    • China is up 283,000 bales to 24.5 million on strong end of season imports.
    • Malaysia is raised 200,000 bales to 1.2 million on greater transit trade.

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