Cotton. World Markets and Trade. May 2013 May 10, 2013
Global Picture Distorted by China’s Dominance
Global production for 2013/14 is forecast down, while consumption is forecast up on rising demand for textiles. Yet, global stocks are projected higher to a new record, while trade is forecast to drop more than 10 percent. Despite this overall bearish scenario, cotton prices are expected to remain relatively high. These apparent market inconsistencies are largely a result of China’s dominance in the global market.
China’s current price support policy continues to remove cotton from the world market, raising its stocks sharply, while other countries’ stocks continue to tighten. While China’s imports are forecast to drop by one third, they are still well above the production relative to consumption. Imports by the rest of the world are expected to reach the highest level since before the global economic crisis.
With these two sectors of the global market moving in opposite directions, any changes in China’s reserve policy would likely have a significant impact on global prices, stocks, and import demand.
For 2013/14, world stocks are expected to increase for the fourth consecutive year despite lower production and higher consumption. Stocks outside of China will tighten slightly as excess stocks continue to be pulled into China by its support policy. U.S. production and exports are forecast down.
The season average U.S. farm price range is projected at 68 to 88 cents/pound.
For 2012/13, world trade and ending stocks are raised, while consumption is virtually unchanged. U.S. exports are up and stocks down, while the forecast season average farm price remains unchanged at 72 cents/pound.
The U.S. spot price and the A-Index continued to be supported as China’s reserve policy tightens stocks outside of China.
2013/14 TRADE OUTLOOK
• U.S. exports are forecast at 11.5 million bales, down 1.75 million on a smaller crop.
• India exports are forecast at 5.5 million bales, down 1.5 million on greater domestic use.
• Australia exports are forecast at 4.7 million bales, down 500,000 on lower world demand.
• Brazil exports are forecast at 2.8 million bales, down 1.7 million on reduced exportable supplies.
• China imports are forecast at 12.0 million bales, down 6.25 million as reserve building slows.
• Turkey imports are forecast at 4.0 million bales, up 300,000 on a smaller domestic crop and strengthening demand.
• Bangladesh imports are forecast at 3.75 million bales, up 150,000 on growing use.
• Pakistan imports are forecast at 3.1 million bales, up 350,000 on rising use.
Trade Changes 2012/13
• United States jumped 250,000 bales to 13.25 million on strong sales to China.
• Australia is up 400,000 bales to 5.2 million on higher world demand.
• Uzbekistan is increased 200,000 bales to 3.1 million on increased world demand.
• Burkina Faso is raised 125,000 bales to 1.1 million on greater exportable supplies.
• Cote d’Ivoire is up 100,000 bales to 550,000 on larger exportable supplies.
• Malaysia is increased 100,000 bales to 900,000 on expanded transshipments.
• Mali dropped 100,000 bales to 800,000 on a smaller crop.
• Tajikistan is raised 100,000 bales to 650,000 on large shipments to Turkey.
• China is boosted 1.75 million bales to 18.25 million on government stock building.
• Bangladesh is cut 100,000 bales to 3.6 million on increased production.
• Thailand is down 100,000 bales to 1.5 million on lower than expected use.
• Turkey is down 100,000 bales to 3.7 million on reduced use