Cotton: World Markets and Trade
Substantial developments comparatively late in the marketing year have resulted in significant changes to trade estimates in this month’s WASDE for 2017/18. In the United States, May and early June shipments were substantially higher than previously expected and shipping orders remain high, resulting in a 500,000 bale increase in the export forecast for the season to 16.0 million bales.
Shipments were especially strong to Vietnam, Turkey, and China, where imports are likewise raised.
Importer data also shows strong trade. With the impact of the slow New Year’s holiday period now past in Vietnam, May imports have remained well above year-ago levels. While some areas outside of China, such as Thailand and South Korea, have begun to show some weakness in consumption, Vietnam’s mill use continues to grow at a robust pace.
China’s imports, meanwhile, are forecast up marginally, motivated by fairly strong March and April imports. Most of this cotton is headed for processing or bonded warehouses, thus does not immediately require import quota. Given that these imports do not require immediate quote usage, this forecast revision does not rely on changed assumptions about whether or not additional quota will be made available.
Exports and imports are both boosted for India. Exports in particular are higher owing to a very strong April export figure published by the Directorate General of Commercial Intelligence and Statistics (238,145 metric tonnes). However, that figure included an error overstating April’s exports to China by over 80,000 tons, confirmed through correspondence with DGCIS. The correct cotton and waste April export figure is nearer to 151,000 tons in total. Even at this lower level, however, India’s April exports were still stronger than is typical, resulting in a higher export forecast for the season.
Overview
For 2018/19, production is forecast down, with declines for China, Pakistan, and Australia partially offset by an increase for Brazil. Consumption and trade are forecast effectively unchanged. U.S. beginning and ending stocks are lowered 500,000 bales with a higher 2017/18 export forecast. The U.S. season-average farm price is up 5 cents to 70 cents per pound.
For 2017/18, production is raised slightly due to increases in Brazil and Australia, while use is effectively unchanged. However, global trade is up, with higher exports for the United States and India accompanied by higher imports by Vietnam, Turkey, and China. The U.S. season-average farm price is unchanged at 68 cents per pound.
Prices
The A-index and the spot price have both risen appreciably in recent weeks, continuing a 3-year upward trend. Rising global demand, particularly for U.S. cotton in recent months, as well as speculation regarding possible release of additional import quota for China have both contributed to this trend.
For more information on U.S. spot price click below link:
https://www.ams.usda.gov/market-news/cotton
