India’s forecast 2017/18 ending stocks have been lowered substantially in the December WASDE, from 13.2 million bales to 11.7 million. This change partly reflects a 500,000-bale cut to production, only partly offset by a 300,000-bale cut in exports, but is primarily driven by a revision to 2017/18 beginning stocks and consumption.
India’s official estimates of cotton consumption were recently revised back to the 2015/16 marketing year, showing higher use than USDA’s data. These revisions were concentrated on “non-mill use,” indicating consumption outside the usual commercial and industrial channels.
Many market observers have suggested for some time that stocks were tighter in India than USDA reports indicated, but uncertainty persisted about which component of the balance sheet might be incorrect. The revised consumption data from India’s Cotton Advisory Board lowers stocks nearer trade-consensus levels via higher consumption.
More on Cotton
In all, from 2015/16 to 2017/18, the most recently revised data suggest an aggregate of about 1.2 million bales more consumption over the 3 years than indicated in the November WASDE. This has a significant impact on India’s stocks-to-use, with 2017/18 stocks-to-use falling from 45 percent in the November WASDE to about 40 percent this month.
These changes are sufficiently large to impact global balance sheets as well, with revisions to India accounting for half of lower 2017/18 ending stocks. Most of the remainder is due to Pakistan, owing to its greatly reduced crop, or higher exports from Australia, Brazil, and the United States.