U.S. Department of Agriculture report lowers U.S. cotton exports and Chinese consumption

by:JIYALI     2021-08-09
In Tuesday's production and supply and demand report, the US Department of Agriculture lowered US cotton exports and China's cotton consumption. Analysts said the reason was the slowdown in economic growth. Market participants said the March report was negative for cotton.   The magnitude of the reduction is basically the same as analysts expected, but some analysts are surprised that the reduction is scattered in several reports, and they expect the reduction to be concentrated in one report.  SFS Futures Company analyst Mike Stevens said that the downward adjustment of US cotton exports is the most eye-catching and surprising. The reason for the downward adjustment is the declining demand in China and Turkey, as well as increased competition from India.   The U.S. Department of Agriculture lowered its U.S. export forecast to 14.5 million bales, lower than the 15.7 million bales estimated in February. The average number estimated by analysts before the report was 15.38 million bales.   After the export reduction, the carry-over inventory was raised to 9.4 million bales, which was higher than the 8.2 million bales reported in February.  The changes in the US Cotton Balance Sheet reflect the world economic situation. Sharon Johnson, an analyst at the First Main Temple Group, said that the USDA takes into account the pressure of the economic recession and overseas influence.   The adjustment of China's data is particularly noticeable because China is the world's largest cotton producer and importer.   The US Department of Agriculture lowered China’s cotton production to 35 million bales, down from the 35.5 million bales reported in February. China's imports are lowered to 12.5 million bales, down from the 13.5 million bales reported in February. China's domestic cotton consumption has also been reduced to 53 million bales, down from 54 million bales reported in February. The US Department of Agriculture lowered China's ending inventory forecast to 16.6 million bales, lower than the 17.14 million bales reported in February.   The domestic consumption of India, the world’s second largest cotton producing country, was lowered to 18.1 million bales, lower than the 18.7 million bales reported last month. India’s export forecast is raised to 6.1 million bales, which is greater than the 5.7 million bales reported in February.   Pakistan's production estimate is raised to 9 million bales, which is larger than the 8.3 million bales reported last month. Pakistan’s import forecast is raised to 3.3 million bales, which is higher than the 3.2 million bales reported in February.   The U.S. Department of Agriculture lowered its forecast for world cotton production to 118.89 million bales, which is less than the 119.21 million bales reported last month. Global consumption is expected to be lowered to 1244.5 million bales, which is smaller than the 126.32 million bales reported last month. The world ending inventory was raised to 59.16 million bales, which was greater than the 57.33 million bales reported in February.   Before the report was released, ICE cotton was trading in the daily limit range, but after the report was released, the market quickly corrected the increase. In the past few trading days, cotton futures traded in the lower limit zone.   At 1005 in the morning, the March contract on the ICE Exchange rose 177 points, at 79.05 cents per pound, and the July contract rose 231 points, at 81.42 cents per pound.
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