USDA Cotton: World Markets and Trade
12 January 2012
China Captures Large Share Of World Stock Accumulation
World ending stocks for 2011/12 are forecast to see the largest single-year increase in 25 years as global production and demand respond to last year's record high prices. 
China will capture about 40 percent of the total increase in world
stocks because of the government’s decision to rebuild reserves.
China’s state reserve has purchased nearly 12 million bales of
domestic cotton and has also purchased several million bales of
foreign cotton. China’s government has announced its intention
to support farm prices by buying unlimited quantities of domestic
cotton at a target price. However, it is unclear to what extent it
intends to release cotton from the reserve later this season or
supplement domestic supplies by allowing additional imports.
Much of the increase in world stocks outside of China will be held by
exporters, as most importers, other than China, are seeking to
minimize stocks in light of sluggish demand and little perceived risk
of higher prices.
Overview
With world supply marginally lower, global consumption is reduced, resulting in higher ending stocks. Trade is largely unchanged. U.S. production is slightly lower and exports reduced by 300,000 bales. The season average price is unchanged.
Prices
The U.S spot price and the A-Index have recovered slightly after the
year-end holidays. However, trading volume remains very low.
Trade Changes 2011/12
Major Exporters:
-
United States is lowered 300,000 bales to 11.0 million on slightly
smaller crop and strong competition from foreign exports.
-
Brazil is increased 100,000 bales to 3.9 million on recent higher
shipments.
Major Importers:
-
China is increased by 500,000 bales to 16.0 million on continued
government stock building.
-
Thailand is decreased by 225,000 bales to 1.4 million as domestic
use falls sharply.
-
Pakistan is lowered by 100,000 bales to 1.3 million on a larger
domestic crop.
-
Indonesia is lowered by 100,000 bales to 1.9 million on sluggish
domestic demand.
January 2012
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