USDA: Cotton inventory is revised

As 2012/13 nears its end, due to the recent slowdown in US shipments, demand estimates have been adjusted. Export estimates for this month were lowered by 300,000 bales to 13.3 million bales. Although export demand was lowered, U.S. exports remained much higher than the 11.7 million bales exported in 2011/12. Therefore, the 2012/13 ending stocks were increased to 3.9 million bales, and the Stock-to-use ratio was 23%.

The July report did not adjust the demand forecast for 2013/14. U.S. exports are expected to be 11 million bales, and textile mill use is expected to be 3.5 million bales. Exports are expected to be curbed by the decline in U.S. production and the drop in foreign import demand, especially in China. Although global trade in cotton declined in 2013/14, the United States’ share of world trade is expected to be 28.7%, which is basically the same as 2012/13.

Based on the latest supply and demand estimates, the ending inventory for 2013/14 is expected to be only 2.9 million bales, which is a decrease of 1 million bales from the beginning of the year, down to the lowest level since 2010/11. The stock-to-use ratio is also expected to decrease by 3 percentage points from 2012/13 to 20%. At the same time, the 2013/14 upland cotton farm price is expected to be between 70-90 cents/lb, compared with 72.0 cents for 2012/13 and 88.3 cents for 2011/12.