Cotton prices rose nearly 8 percent in February, according to the latest numbers from the Agriculture Department.
The seven-market U.S. average cotton spot price increased by 7.9%, or $0.045, to $0.6291 per pound, despite revised forecasts calling for slight increases in global supply and reductions in demand in the current season.
World cotton stocks are projected to reach a new record by the end of the current season, rising 7.9% to 109.8 million bales, partly due to a 200k bale increase expected in Pakistan.
Global cotton mill use for 2014-2015, on the other hand, is forecast to rise by only 2 percent above last year, to 111.3 million bales, less than previously thought. The largest change in demand was for China, which was lowered by a million bales to 35.5 million. China has started to release large portions of the cotton reserves it stockpiled during the buying program it implemented for several years to support prices. The country is expected to import 7.3 million bales of cotton in the current crop year, a little over half last-year’s level.
India, the world’s second largest exporter after the U.S., recently surpassed China in cotton production as acreage there remains stable to slightly up. India’s acreage plans for 2015/2016 will have significant impact on global production and prices given its limited warehousing capabilities.
Though the USDA revised its forecast for production upward and its estimate for consumption downward in the current crop year of 2014/2015, it estimates that in the 2015/2016 season U.S. cotton acreage will decline by 14.6% and that the national harvest will total 14 million bales, down from an expected 16.1 million bales in the current year.