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USDA Cotton: World Markets and Trade

13 May 2015

USDA Cotton: World Markets and Trade - May 2015USDA Cotton: World Markets and Trade - May 2015

USDA Cotton: World Markets and Trade Reports

Global Consumption Rises Above Production, Stocks Fall

USDA’s initial forecast for 2015/16 shows world consumption exceeding production for the first time in 6 years. As a result world stocks will decrease by almost 4 percent to 106.5 million bales; however, the stocks-to-use ratio of 92 percent will remain near historic highs.

World production is forecast to fall nearly 7 percent in response to lower prices in most major producing regions. India is forecast to decline only slightly as its support policy protects farmers from world prices decline. China is expected to fall by 10 percent to the lowest level since 2003, led by a steep decline in eastern provinces due to the less generous level of support under the current program. Xinjiang will likely decline slightly in response to a reduced target price and efforts to exclude unregistered land from receiving subsidies. An 11 percent drop is projected for the U.S. as harvested area responds to lower prices.

World consumption is forecast to increase by 3.5 percent, based on world GDP growth and the lagged effect of falling cotton prices. China is forecast to increase at less than the world rate as domestic policies keep cotton prices above world prices despite its massive stock level. Structural changes in China’s spinning sector will limit growth. Outside of China, growth is expected to be focused in those countries which have benefited from the situation in China. India, Pakistan, and Southeast Asian countries in particular are expected to continue to experience spinning growth.

Despite rising demand in import dependent counties such as Pakistan and Southeast Asia, world trade is
expected to virtually unchanged. Imports in China are expected to fall to the lowest level in 13 years due
to continuing import restrictions accompanying efforts to reduce government-held stocks. India’s exports
are expected to increase sharply in response to the large carry-in stocks that resulted from this season’s
support policy. Australia’s exports are expected to decline due to a second season of unfavorable weather
and planting conditions.

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