US cotton production dropped sharply but stocks still increase

The United States 2011/2012 cotton forecast shows that, despite unfavorable weather conditions leading to a significant reduction in production forecasts, the year-end inventory of cotton is still forecast to increase compared to the previous month. Due to the cancellation of export contracts and slow shipments in the last months of 2010/2011, the initial inventory was raised by 500,000 bales. Domestic demand has not been adjusted. The combination of reduced supply in the United States and weak foreign demand led to a reduction of exports by 1 million bales to 12 million bales. Year-end inventory was raised to 3 million bales. The average price of the farm is forecast to be 90,110 cents per pound, and the upper and lower limits are lowered by 5 cents each.

The global 2011/2012 cotton forecast includes: initial inventory increase while production and consumption are reduced. The initial inventory increase was mainly due to the increase in inventories in the United States and India. Due to an increase in the inventory of yarn mills and an increase in the amount of polyester substitute cotton in cotton textiles, global cotton consumption was reduced by nearly 2% this month. The slowdown in demand has led to a reduction in imports by some countries, of which China’s demand has been reduced by more than half. The global year-end inventory was increased by nearly 6% to 51 million bales. The forecasted inventory/consumption ratio is 44%, which has eased compared to the very tight levels of the previous two years, but it is still the lowest level since 1994/1995.