Global Markets: Cotton – USDA Predicts Higher Global Production, Stocks

USDA Cotton Classing Office in Lubbock, Texas Photo: Justin Place

USDA’s first 2019/20 world cotton projections, unveiled last month at the annual Outlook Forum, anticipate that production will exceed consumption, raising world stocks slightly by 1 million bales.

The outlook for China shows imports, consumption, and production projected up, while stocks are expected to fall for the fifth consecutive year. With the decline in China’s stocks, stocks outside of China are projected to increase significantly. As a result, the average A-Index and the season-average U.S. farm price are expected to decline.

World cotton production is expected to rise 6.8 percent with yields rebounding in several countries and area also rising. U.S. 2019/20 cotton production is expected at 22.5 million bales, based on higher planted area and sharply lower abandonment. This would be the third-highest production on record; if realized, the expanded production would account for half of growth in global production.

World trade is projected to expand, bring it near the record levels seen in 2011/12 and 2012/13. Much of the increase is expected in China as smaller sales from the State Reserve reduce available domestic supply, meaning that higher imports will be needed to close the gap.

Global consumption is expected to continue growing, but at a rate slightly below its long-run average based on weaker global economic growth.

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