Cotton: World Markets and Trade Dec. 12, 2012
China’s imports in the first quarter of the 2012/13 marketing year are similar to last year, helping to stabilize world prices. Although consumption is continuing to decline, import demand has remained strong, driven by limited free stocks due to the sale of 17 million bales (nearly three times that of last year) of the new crop to the State Reserve. However, for the full year the import forecast is less than half the previous year.
This implies imports for the balance of the marketing year will taper off, especially after the first of the year, when some cotton is expected to be released from the State Reserve. Declining import demand could exert pressure on world prices.
Global cotton stocks for 2012/13 are reduced slightly due mostly to lower carryover stocks. U.S. ending stocks are down on lower production and higher exports, which were raised on recent sales to China.
The season average farm price remains at 68 cents/pound.
The U.S. spot price and the A-Index remained relatively flat pending further developments in China’s reserve policy.
2012/13 Trade Outlook
• United States is raised 200,000 bales to 11.8 million on stronger demand in China.
• India is up 500,000 bales to 4.0 million on greater than expected recent trade.
• Brazil is increased 200,000 bales to 4.2 million on strong early season shipments.
• Benin is revised up 125,000 bales to 450,000 due to a larger crop.
• Burkina Faso is up 100,000 bales to 900,000 due to a larger crop.
• China is up 500,000 bales to 11.5 million due to apparent China State Reserve buying of foreign cotton.
• India is raised 500,000 bales to 1.5 million on tighter supplies.