Cotton:USDA Anticipates Increase In US Stocks

MUMBAI (Commoditiescontrol):USDA released estimates for US and World Cotton Supply and Demand numbers. Also released was expected sowing and harvest numbers for the US. The main highlight of the report is that stocks are increasing in the US as production increases and consumption remains more or less unchanged. World ending stocks are estimated to drop largely on the 2 million bales auction conducted by China.

Planted And Harvested Area



Source: USDA

USDA expects planted area in 2016/17 to increase by 11 percent while harvested area to increase by 9 percent. 2015/16 estimated planted area was 8.58 million acres which is expected to increase 9.56 million acres. Harvested area is expected to rise to 8.80 million acres in 2016/17 from 8.07 million acres in 2015/16. Month on month, USDA expects no change either in planted area or harvested area. When compared to 2014/15 planted area is still down by 13 percent and decline in harvested area will be 6 percent.

Yield per harvested acre is expected to move up from 766 pounds to 807 pounds an increase of 5 percent year on year. Month on month values continue to remain unchanged. When compared to 2014/15 numbers yield per acre is still down by 4 percent.

Loss In Harvested Acreage



Source: USDA; Commodities control

Loss in harvested acreage was maximum in 2014/15 at 15.31 percent of the planted area. Projections for 2016/17 is a loss in harvested area of 7.95 percent.

Supply and Demand





Source:USDA

Production is expected to improve to 14.8 million 480 pound Bales this year as compared to 12.89 in 2015/16 which is a 14.82 percent year on year. However, when compared to 2014/15 production drops by 9.3 percent.

Domestic use has been almost unchanged being 3.58 million 480 pound Bales in 2014/15, 3.55 in 2015/16 and 3.6 in 2016/17.

Exports are expected to improve moderately this year to 10.5 million 480 pound Bales from 9 million 480 pound Bales an increase of 16.67 percent. However, when compared to 2014/15 exports are projected to drop by 6.7 percent.

Imports over the years have been negligible at 0.01 million 480 pound Bales.

Stocks



Source:USDA

Beginning stocks and ending stocks are consistently increasing year on year. From 2014/15 to 2015/16 beginning stocks increased by 57.45 percent while from 2015/16 to 2016/17 it is anticipated to increase by 8.11 percent. Month on month beginning stocks are expected to increase by 2.5 percent.

Ending stocks too are registering year on year increase. From 2014/15 to 2015/16 ending stocks increased by 11 percent and are anticipated to increase further by 17.07 percent from 2015/16 to 2016/17. Month on month increase in ending stocks is expected to be 2.13 percent.

Thus increase in both beginning stock and ending stocks point to constant increase in supply of cotton in the market which would mostly keep prices under pressure.

India



Source: USDA; Commodities Control; May to June Change in Percentage

Beginning stocks are estimated to drop 60.62 percent from 10.89 to 6.78 million 480 pound bales. Drastic drop is estimated in production by 337.5 percent from 28 to 6.4 million 480 pound bales. Equally drastic is the drop in domestic use by 690.32 percent from 24.5 to 3.1 million 480 pound bales. The only positive number in the entire report is a 5 percent increase in exports from 3.8 to 4 million 480 pound bales.

World

The main highlight in the USDA report was the estimated decrease in China crop to 1 million bales in 2016/17 from 1.3 million bales in 2015/16 a drop by 23 percent. Global stocks are estimated to stand at 94.7 million bales a drop of 1.7 million bales from last month’s report. Maximum drop in stocks is on account of a large drop in China’s ending stocks by 2 million bales.

(By Commoditiescontrol Bureau; +91-22-40015522)