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USDA Cotton: World Markets and Trade


12 February 2013

USDA Cotton: World Markets and Trade - February 2013USDA Cotton: World Markets and Trade - February 2013


USDA Cotton: World Markets and Trade Reports

China's Reserve Purchases Outpace Last Year

China’s State Reserve purchases reached 28.3 million bales on February 1st (twice last season’s total purchases), representing more than 80 percent of the 2012 crop. Purchases began earlier and progressed at a much faster rate than last year. The China National Cotton Reserve Corporation (CNCRC) announced in early January that buying would be suspended during February in order for warehouses to consolidate holdings and expedite shipping to areas where it could be more readily sold. Reserve buying after the break is expected to be limited, as most of the remaining supplies don’t meet quality requirements.

An estimated two thirds of this year’s Reserve purchases came from Xinjiang province. With little commercial opportunity, gins in Xinjiang sold most of their production to the Reserve as soon as it was available.

Commercial buyers in the eastern provinces were reluctant to buy higher priced Xinjiang cotton, since CNCRC was selling old crop supplies at a discount. Gins in the east were more successful selling local cotton to mills for prompt delivery, due in part to lower transportation costs.

Overview

Global cotton stocks, production, and consumption for 2012/13 are essentially unchanged. Global trade was raised, mostly due to a higher import forecast for China. U.S. ending stocks are down on higher exports, which were raised high imports by China. The season average farm price was raised to 71 cents/pound on strong early season sales and continued strong prices.

Prices

The U.S. spot price and the A-Index were both higher as China’s reserve policy continues to isolate more supplies from the world market.

Monthly Average Cotton Prices

2012/13 TRADE OUTLOOK

Major Exporters:

The following changes were made due to stronger demand from China.

  • United States is raised 300,000 bales to 12.5 million.
  • Brazil is increased 200,000 bales to 4.6 million.
  • Australia is revised up 200,000 bales to 4.5 million.
  • Uzbekistan is raised 200,000 bales to 2.9 million.
  • Greece is revised up 100,000 bales to 1.1 million.
  • Franc-Zone Africa increased 225,000 bales to 3.4 million.

Major Importers:

  • China increased 1.5 million bales to 14.0 million as limited early season State Reserve sales raised import demand.
  • Turkey is raised 300,000 bales to 3.8 million on a smaller crop and increased demand.
  • Pakistan is revised up 100,000 bales to 2.5 million on a smaller crop.
  • Mexico is lowered 100,000 bales to 1.15 million on lower stock holdings.
  • Bangladesh is lowered 100,000 bales to 3.55 million on lower stock holdings.

Trade Changes 2011/12

There were no major changes.

February 2013

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