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USDA Cotton: World Markets and Trade


08 November 2013

USDA Cotton: World Markets and Trade - 8 November 2013USDA Cotton: World Markets and Trade - 8 November 2013


USDA Cotton: World Markets and Trade Reports

For the past several years, supply estimates for India have been insufficient to meet utilization. Stronger data-based export and consumption information have raised concerns about India’s production and ending stock estimates. Consequently, USDA has been using a residual estimate in its balance sheet beginning in 2006/07 to reflect the difference between reported supply and demand.

Recently, the India Cotton Advisory Board provided a higher production estimate for the 2012/13 crop. USDA adopted this revision. USDA also has raised production and ending stock estimates for 2006/07 through 2011/12, eliminating the residual. Details of the changes to the USDA estimates are shown on page three.

Overview

The global outlook for 2013/14 is mostly unchanged, with ending stocks up slightly. U.S. production, consumption, and ending stocks are raised. The forecast for the average U.S. farm price was lowered to 74 cents.

Prices

The U.S. spot price and the A-Index continue to decline on concerns about China’s reserve policy.

2013/14 TRADE OUTLOOK

Major Exporters:

• Brazil is raised 200,000 bales to 2.8 million on greater exportable supplies.

• Egypt is cut 100,000 bales to 250,000 on revised data from the previous year.

• Greece is up 100,000 bales to 1.1 million on larger exportable supplies.

Major Importers:

• Egypt is down 225,000 bales to 400,000 on an expected drop in consumption.

• Bangladesh is up 100,000 bales to 3.7 million on lower prices.

• Vietnam is up 150,000 bales to 2.7 million on higher than expected use.

Trade Changes 2012/13

Major Exporters:

• India is raised 100,000 bales to 7.7 million on a larger crop.

Major Importers:

• Egypt is lowered 270,000 bales to 230,000 on lower than expected consumption.

• India is down 100,000 bales to 1.2 million on a larger crop.

The November 2013 cotton estimates for India include historical revisions beginning in 2006/07. USDA’s India supply and demand estimates, which are based mostly on official government data sources, have resulted in July 31 stocks which are too low to support documented consumption and exports during the ensuing months prior to the availability of the next harvest. Previously, USDA addressed this problem by showing residuals in order to keep stocks above estimated minimum thresholds. This month’s changes from the September 2013 estimates include adjustments to production, which permit the elimination of the “residual/loss” in all years. The 2013/14 projection of 29.0 million bales is unchanged from USDA’s September estimate and is marginally below the initial estimate reported on November 1, 2013 by India’s Cotton Advisory Board (CAB). For 2012/13, production is raised 2.0 million bales to 28.5 million, which is consistent with the revision reported by the CAB on November 1. For 2011/12, production is now 1.3 million bales above the CAB estimate, which was last revised in January 2013. Production for the 2006-2010 crops, which in September reflected CAB estimates, is raised 3 percent each year.

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