22-Skelly-US Cotton Industry Situation and Outlook.pdf

Prospects for United States Cotton Supply and Demand in 2013/14 by Carol Skelly U.S. Department of Agriculture China International Cotton Conference June 6, 2013 Introduction The United States is the world’s third largest cotton producer, after China and India, and the world’s largest cotton exporter. While the indicators are not conclusive, it is likely that the U.S. has been surpassed by China as the world’s largest retail consumer of cotton goods. The U.S. and China are also the world’s highest-volume cotton trading partners, as China is the largest customer of U.S. raw cotton and the U.S. is its largest supplier (although India is a very close second for the 2012/13 season to date). And China continues to be the largest exporter of cotton textiles into the United States, with a 30-percent share of the U.S. market. Background-China and World Supply and Demand On May 10, 2013, USDA published its first comprehensive projections for 2013/14 world, U.S., and foreign cotton supply and demand (based on a marketing year of August1-July 31). The 2013/14 world and U.S. cotton markets will be subject to the usual uncertainties of weather, production, and demand; in addition, actions taken by the government of China to acquire and release domestic cotton and to permit imports of foreign cotton will have a significant impact. Thus, the cotton outlook for 2013/14 presents the unique challenge of forecasting the direction of China’s cotton price support and national reserve policies. USDA currently estimates that 8.6 million tons, or 47 percent of expected world stocks, will be held in China’s national reserve on July 31, 2013. 47% of World Stocks Estimated in China Reserve at End of 2012/13 0 5 10 15 20 2009/10 2010/11 2011/12 2012/13 m il . to n s China reserve China free stocks Stks outside China USDA further projects that China’s reserve purchase and release prices will remain at the current levels through 2013/14. We