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Overview of the global cotton market as of 21.01.2023
Basic indicators. The US Department of Agriculture published the January report on the state of the world cotton market. As noted in the report, the production forecast for the 2022/23 season compared to the previous season is reduced to 25.13 million tons, largely due to the United States (-620 thousand tons to 3.20 million tons) and Australia (-163 thousand tons to 1.01 million tons), which will be partially offset by an increase in production in China (+261 thousand tons to 6.01 million tons), in India (+457 thousand tons to 5.77 million tons ) and in Turkey (+240 thousand tons to 1.07 million tons)..
World cotton consumption in the 2022/23 season will decrease by 1.45 million tons to 24.14 million tons. The largest cotton consumers in the 2020/21 season are China (7.73 million tons), India (4.9 million tons), Pakistan (1.96 million tons), Bangladesh (1.79 million tons), Turkey ( 1.74 million tons) and Vietnam (1.4 million tons). Key consumers, including China, India and Pakistan, are facing challenges, including a downward trend in profitability and yarn orders, which in turn has led to conservative cotton fiber buying practices. In addition, the lower global consumption forecast reflects the slowdown in overall global demand for cotton products.
The world trade forecast for 2022/23 is 9.07 Mt, which is 2.9% or 0.27 Mt less than the 2021/22 season. The top five importers will include Bangladesh (1.74 million tons), China (1.69 million tons), Vietnam (1.4 million tons), Pakistan (1.09 million tons) and Turkey (0.94 million tons). The main cotton exporters in the world in the 2022/23 season will be the USA (2.61 million tons), Brazil (1.81 million tons) and Australia (1.29 million tons).
Ending world cotton stocks by the end of the 2022/23 season will increase by 1 million tons to 19.58 million tons. China (8.15 million tons), Brazil (2.97 million tons) and India will become the largest holders of stocks (2.44 million tons), which account for 70% of the world’s cotton reserves.
The US seasonal average farm price is cut 2 cents to 83 cents per pound. World cotton prices are virtually unchanged from WASDE last month. Slightly higher prices on the Intercontinental Exchange (ICE) supported US spot prices despite relatively weak overseas sales. The last eight USDA reports put total net sales below 120,000 bales and well below normal seasonal levels. Indian Origin was the only spot price to record a monthly decline despite a sharp decline in raw cotton supplies. According to the Indian Ministry of Agriculture, the number of arrivals has decreased by about 40% compared to the previous year.
Market conditions. China. Cotton imports to China from the US soared to a new high in 2022. In June 2022, the US imposed a ban on cotton and cotton products from the Chinese region of Xinjiang, which led to a sharp increase in China’s cotton imports. In 2021, China imported $1.6 billion worth of cotton, and in the first 11 months of 2022, imports reached $2.899 billion. In 2020, inbound trade increased to $1.6 billion compared to imports in $731.486 million in 2019. China’s cotton imports were $1.063 million in 2018 and $980.24 million in 2017, according to the Fibre2Fashion TexPro market analysis tool. China’s imports totaled $1.74 billion in the first half of 2022 compared to inward shipments of $470.47 million in the second half of 2021, $1.13 billion in the first half of 2021, 1. $07 billion in H2 2020 and $530.622 million in H1 2020, according to TexPro. Last year, cotton prices on world markets rose sharply due to low production and rising consumption. This prompted Chinese importers to turn to the US. With the US banning cotton production in the country’s Xinjiang region, the Chinese textile industry has no choice but to import cotton from the US to support textile exports to the world’s largest economy.
USA. On Jan. 19, the USDA released a weekly US cotton export sales report for Jan. 6-12. According to the ministry, during this period, cotton export contracts amounted to 44,870 tons, which is 3 times more than last week and significantly higher than the average of the last 4 weeks. The largest buyers of American cotton were China (11,810 mt), Pakistan (9,340 mt), Vietnam (9,100 mt), Turkey (5,485 mt) and the Republic of Korea (4,000 mt).
At the same time, shipments of US cotton for this period amounted to 39,235 tons, which is 22% more than last week and 48% higher than the average of the last 4 weeks. US cotton for this period was mainly shipped to countries such as China ( 12,900 t), Pakistan (9,880 t), Mexico (2,890 t), Vietnam (2,700 t) and Indonesia (1,500 t).
Brazil. Brazilian cotton acreage could increase in 2022/23 due to good profitability in recent years. However, it may be affected