Substantial developments late in the marketing year have resulted in significant changes to cotton trade estimates in this month’s U.S. Department of Agriculture Foreign Agricultural Service “Cotton: World Markets and Trade” report.
In the U.S., May and early June shipments were substantially higher than previously expected and shipping orders remained strong, resulting in a 500,000-bale increase in the export forecast for the season to 16 million bales. The report said shipments were especially strong to Vietnam, Turkey and China.
“With the impact of the slow New Year’s holiday period now past in Vietnam, May imports have remained well above year-ago levels,” the report said. “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 to increase marginally, pushed by strong March and April imports, the USDA noted. Exports and imports both increased in India. Exports in particular were higher thanks to a strong April export figure published by the Directorate General of Commercial Intelligence and Statistics, resulting in a higher export forecast for the season.
For 2018-19, global production is forecast to decrease, with declines for China, Pakistan and Australia partially offset by an increase for Brazil, the report noted. Consumption and trade are forecast to be flat. U.S. beginning and ending stocks were 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 was raised slightly due to increases in Brazil and Australia, while use was basically unchanged. However, global trade is up, with higher exports for the U.S. and India accompanied by higher imports by Vietnam, Turkey and China, the report added.
The report noted that the futures A-index and the spot price “have both risen appreciably in recent weeks, continuing a three-year upward trend.” Contributing to the trend are rising global demand, particularly for U.S. cotton in recent months, as well as speculation regarding possible release of additional import quota for China.