COTTON: The U.S. 2016/17 cotton projections show higher production offset by higher exports, with beginning and ending stocks revised down from last month. The 1.0-million-bale increase in the crop projection is attributable mainly to higher planted area as indicated in the June 30 Acreage report, combined with slightly more favorable assumptions about abandonment and yield based on current conditions. Domestic mill use is unchanged, but exports are projected sharply higher due to the larger U.S. supply and an expectation of continued tight foreign stocks. The projected range of 52 to 66 cents per pound for the marketing year average price received by producers is raised 5 cents on the lower end and reduced 1 cent on the upper end; the midpoint of 59 cents is raised 2 cents from last month.
A combination of modestly lower production and significantly higher consumption is reducing this month’s global cotton stock forecasts for both 2015/16 and 2016/17. The world carryin for 2016/17 is decreased 1.8 million bales owing to a sharp increase of 1.5 million bales in estimated 2015/16 China consumption. Recent strong demand for the government’s reserve sales indicates that mills are consuming more cotton than previously estimated. A parallel increase is made in projected China consumption for 2016/17. World 2016/17 production is reduced about 600,000 bales, despite the higher expected U.S. crop, mainly on reduced area expectations for Pakistan and India. Production is also raised for Australia, but is lowered for Greece and Uzbekistan. Smaller foreign crops are raising imports and reducing exports, especially for Pakistan. World 2016/17 ending stocks are now projected at 91.3 million bales, a reduction of 9.0 million from the beginning level.
Source: USDA WASDE