COTTON: This month’s 2011/12 U.S. cotton supply and demand estimates include lower production and higher exports, resulting in a decrease of 500,000 bales in forecast ending stocks.
Production is reduced 119,000 bales based on USDA’s Cotton Ginnings report, released March 23, 2012, while exports are raised 400,000 bales, reflecting very strong shipments in recent weeks. Domestic mill use is unchanged. Ending stocks are now forecast at 3.4 million bales, equivalent to an ending stocks-to-use ratio of 23 percent. The forecast range for the average price received by producers of 89 to 93 cents per pound is raised 1 cent on the lower end.
The forecast for 2011/12 world cotton ending stocks is raised sharply this month, due partly to historical adjustments for India that increase beginning stocks by 3.25 million bales and ending stocks by 1.6 million bales. Analysis of India’s reported exports for the months of August-December 2011 indicates that stocks were significantly higher on August 1, 2011, than estimated previously (see http://www.fas.usda.gov/psdonline/circulars/cotton.pdf for further details).
In addition, the government of China’s accumulation of cotton in the national reserve is constraining free supplies, thereby boosting its imports while limiting consumption. As a result, China’s stocks are raised 3 million bales to 23.1 million, a level that assumes minimal release of reserve stocks before the end of the marketing year on July 31. China’s forecast ending stocks now account for 35 percent of world stocks.
World production for 2011/12 is reduced about 500,000 bales, as reductions for India, the United States, and others are partially offset by increases for Pakistan and Sudan. World consumption is reduced 1.0 million bales, due to the reduction for China, and is now estimated at 6 percent below 2010/11. Adjustments to world trade reflect a 2.0-million-bale increase in China’s imports to a record 20.5 million, combined with increases for Malaysia, Indonesia, and Vietnam, partially offset by a decrease for Pakistan. Exports are raised for India, the United States, Pakistan, and Brazil.
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