The latest U.S. Department of Agriculture (USDA) cotton projections for 2020/21 (August-July) indicate that global cotton ending stocks are forecast at their highest in 6 years. World stocks are projected to rise for the second consecutive season in 2020/21 to 104.7 million bales, 4 percent above 2019/20 and the second largest on record behind 2014/15.
Global stocks totaled 106.7 million bales at the end of 2014/15—with China accounting for 62 percent of the total as Government policies there resulted in surplus stock accumulations. As subsequent policies reduced China’s stocks, the share of global cotton supplies for other countries increased in recent years.
U.S. Cotton Production Forecast Unchanged in June
USDA’s 2020 U.S. cotton production projection remains at 19.5 million bales in June, 2 percent (400,000 bales) below the 2019 crop. Upland production is estimated at 18.8 million bales, and the extra-long staple (ELS) crop is estimated at 665,000 bales, both below the 2019 crop. Planting conditions have been less than ideal this spring, with weather delaying planting in several States this season. With planting still in progress, the weather effects on total area and yield remain uncertain.
The U.S. planting estimate of 13.7 million acres will be updated in USDA’s June Acreage report released on June 30. The report will include actual plantings as of early June, as well as estimates of any remaining cotton to be planted. As of June 7, 78 percent of the forecast cotton acreage had been planted, up slightly from last season’s 74 percent but below the 2015-19 average of 81 percent.
Meanwhile, early cotton development was ahead of both 2019 and the 5-year average; as of June 7, 13 percent of the cotton area was squaring, compared with 10 percent for both last season and the 2015-19 average. Reporting of U.S. cotton crop conditions has also begun, with early accounts confirming the less-than-favorable start to the 2020 season. As of early June, crop conditions were slightly above 2019 but below the 5-year average.
Based on current projections, U.S. cotton harvested area is forecast at 11.35 million acres in 2020, reflecting a 10-year weighted average abandonment by region. U.S. abandonment is projected at 17 percent, slightly above the 15.5 percent recorded for 2019. The 2020 U.S. cotton yield—based on a 10-year weighted average by region—is forecast at 825 pounds per harvested acre, slightly above the final 2019 yield of 823 pounds. USDA’s National Agricultural Statistics Service will begin in-field surveys in August.
U.S. Cotton Mill Use and Stock Estimates Revised
U.S. cotton demand (exports plus mill use) for 2020/21 is projected at 18.8 million bales—down slightly from the May forecast—compared with the 2019/20 estimate that was lowered in June to 17.5 million bales. The higher 2020/21 forecast is attributable to expectations for both exports and mill use rebounding from the COVID-19 impacts on 2019/20 cotton demand.
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For 2020/21, U.S. cotton exports are projected at 16.0 million bales—1 million above 2019/20 and the third highest on record—as increased foreign import demand associated with a rise in global cotton mill use is projected. The United States is forecast to remain the leading cotton exporter despite facing strong competition from other leading producing countries like Brazil and India.
The U.S. share of global trade in 2020/21 is projected near 37.5 percent, similar to the 3-year average. U.S. cotton exports are forecast to account for 85 percent of U.S. cotton demand in 2020/21, near that of 2019/20. Meanwhile, U.S. cotton mill use is projected to rise 12 percent to 2.8 million bales in 2020/21 as U.S. spinning operations recover with the reopening of the U.S. economy.
Based on USDA’s June supply and demand estimates, 2020/21 U.S. cotton ending stocks are projected at 8.0 million bales, 700,000 bales (nearly 10 percent) above the beginning level and the highest in 13 years, when ending stocks were 10.1 million bales.
Similarly, the stocks-to-use ratio is also forecast to increase; in 2020/21, the stocks-to-use ratio—which averaged 30 percent over the past 3 years—is expected to reach 43 percent, slightly above 2019/20 and the highest since 2007/08. As a result, the 2020/21 U.S. upland farm price is forecast to decline from 59 cents per pound estimated for 2019/20 to 57 cents per pound.