US cotton exports are set to fall 5% in 2015/16

US cotton exports are set to fall 5% in 2015/16

Cotton prices tumbled on Tuesday (9 February) after forecasts projected this year's stockpiles of the raw material would rise amid continuing weak demand from China.

Cotton for March delivery dropped to 58.7 cents a pound on the ICE Futures US exchange after the US Department of Agriculture's (USDA) monthly World Supply and Demand Estimates report suggested US cotton exports will fall by 5% or 500,000 bales to 9.5m bales, reflecting sharply lower imports by China compared to last season. 

International cotton prices, as measured by the Cotlook A index, have averaged 70 cents/lb over the period from August 2015 to January 2016.

The USDA also projects ending stocks at 3.6m bales, or 27.5% of total use – up from last month's estimate of 3.1m bales.

Production and domestic mill use forecasts are unchanged, while the predicted average price of 58-61 cents per pound is raised 1 cent on the lower end, with the mid-point now forecast at 59.5 cents. 

Meanwhile, world consumption estimates are lowered 1.3m bales to 109.6m bales, which also includes reductions for India and Brazil.

Consumption and imports are reduced for China to 32m bales and 5m bales respectively, based on continued sluggish demand. Those measures are also lowered for Pakistan, where a slower pace of imports indicates reduced demand, to a respective 9.8m bales and 2.3m bales. 

With global imports nearly 1m bales below last month, exports are reduced for Brazil, India, and Pakistan, in addition to the US. 

Global stocks are now forecast at just 104.1m bales from 102.9m last month. 

As reported on just-style last week, the ongoing drop in polyester prices is hurting cotton consumption in China, with Vietnam now poised to overtake China as the largest importer of cotton in the current year.

Cheap polyester contributes to shifts in cotton imports