WASDE Cotton: Abandoned Acres Reduce Projections to 14M Bales; Southwest 25% Down
The U.S. cotton projections for 2013/14 include lower production, exports, and ending stocks compared with 2012/13. Projected production is reduced 19 percent to 14.0 million bales, based on regional average abandonment and yields. Abandonment for the Southwest region is projected at 25 percent due to continued drought conditions. Domestic mill use is projected at 3.5 million bales, 100,000 bales above 2012/13. Exports are projected at 11.5 million bales, down 13 percent from 2012/13, due to the smaller available domestic supply and lower imports by China. Ending stocks are reduced to 3.0 million bales, equal to 20 percent of total use, which is well below the previous 10-y ear average. The forecast range for the marketing year average price re ceived by producers is 68.0 to 88.0 cents per pound, compared with 72.0 cents estimated for 2012/13.
The initial 2013/14 world cotton projections show world ending stocks of nearly 93 million bales, the third consecutive seasonal record, as China’s policy of stockpiling cotton in its national reserve is assumed to continue. World production is projected nearly 3 percent lower than 2012/13 at 117.8 million bales, as reductions, mainly for the United States, China, Turkey, Greece, and Mexico, are partially offset by increases for Brazil, India, Pakistan, and Australia. World consumption is expected to rise 2 percent due to modest growth in world GDP. World trade is expected to fall 12 percent, as sharply lower imports by China and India are partially offset by increases for Pakistan, Turkey, Mexico and others. World ending stocks outside of China are projected to fall nearly 2.0 million bales.
China’s national reserve stocks are currently expected to reach nearly 40 million bales at the end of 2012/13. Based on the government of China’s current reserve purchase and release prices and import quota policies, USDA is projecting that China will import 12.0 million bales in 2013/14 and will add 10 million bales to ending stocks as reserve purchases exceed reserve sales. T he resulting projected China ending stocks of 58.2 million bales would account for 63 percent of world stocks.
For 2012/13, the final U.S. crop production estimate of 17.3 million bales is virtually unchanged from last month. U.S. exports are raised 250,000 bales, reflecting recent activity and stronger expected imports by China, which are raised 1.8 million balance from last month. India’s production and consumption also show significant increases.
The ICE Dec and Mar contracts gave back 160 and 87 points on the week, respectively, as last week’s inversion between the two contracts gave way to partial carry. Well,