The USDA’s November report reveals record demand outpacing higher revised production, in the U.S. and worldwide.
Demand for U.S. cotton climbed 200,000 bales from October, driven by anticipated exports climbing to a record 16.2 million bales. Through the first fourteen weeks of the marketing year, exports stand at 7.8 million bales, or 47.9% of the total necessary to reach 16.2 million. This relative pace is comparable to the pace seen in recent years, confirming the viability of reaching such a lofty forecast.
With gains in supply outpacing higher demand estimates, ending stocks climbed to 6.5 million bales, marginally loosening the stocks-to-use ratio from 29.1% in October to 29.3%, suggesting little fundamental evidence for dramatic change in price.
Worldwide, changes in the fundamentals mirror the changes seen in the United States. Production expanded by 274,000 bales to 111.7 million (480-lb. bales), as gains in Uzbekistan (600,000) and the U.S. offset a dramatic decline in Brazil (850,000 bales). The 15% drop in Brazilian production is rumored to be attributable to perceived poor local prices and heavy debt burdens for Brazilian producers.
Chinese consumption drove the increase, jumping one million bales from October to a record 42.5 million bales, reflecting the dramatic year-over-year expansion in Chinese yarn and fabric output. Pakistan (500,000 bales) and India (250,000) also enjoyed higher mill demand estimates from month-earlier levels, reaching record levels of 11.8 and 16.8 million bales, respectively, driven by record exports of cotton textile and apparel products.See: World Cotton Production & Consumption