![Cotton](https://kjcdn.gumlet.io/media/74747/cotton.jpg)
Global cotton prices have shown some improvement in the prices as the lowered offers could attract a greater percentage of the industry for fresh purchases. The markets were in a downward trend in the month of June.
The USDA in its latest attaché has pegged U.S. cotton production at 1 million bales lower than in June, at 15.5 million. U.S. exports are also projected lower, down 500,000 bales to 14.0 million, reflecting both lower U.S. production and a reduction in world trade. At 2.4 million bales, 2022/23 U.S. ending stocks are now expected to be 1.0 million bales lower than in 2021/22.
For the global 2022/23 cotton balance sheet, ending stocks are higher than projected in June, despite a 1.2 million bale cut to expected production. Beginning stocks are higher, as 2021/22 consumption is cut by nearly 2.0 million bales and projected consumption in 2022/23 is also reduced by 1.6 million. While China accounts for half of the month-to-month decline in 2021/22 consumption, the change in 2022/23 consumption is spread over four major consumers: China, India, Bangladesh, and Vietnam. Brazil is the only country besides the United States to have its 2022/23 production reduced.
World trade is trimmed by 1.1 million bales by the USDA, after considering the reduced imports by China, Bangladesh, and Vietnam. Brazil’s exports are estimated 500,000 bales lower, partly reflecting lower expected production there in 2021/22. Global ending stocks are projected 1.5 million bales higher than in June and about equal to the 2021/22 level.
The sowing of cotton has picked up in the month of July. As per the government sowing data till end of June, the acreage was around 31.83 lakh hectares versus 37.84 lakh hectares during the last year’s corresponding period. But as on July 15, India’s cotton sowing had increased by more than 6% compared to the corresponding period of the previous year. The US cotton exports had seen some improvement during the first week of July. As per the latest data, US cotton exports have reached 12.076 m bales, or 81.9% of the June WASDE forecast, and still there are 2 months left for the season.
US cotton had trended lower between June 9 and July 5. There was a significant change in investor sentiment. The effects of inflation, the withdrawal of stimulus, rising interest rates, and concerns about a possible recession appear to be the major reasons for the reversal from the upward trend. The macroeconomic environment can be expected to continue to weigh on prices, but there are also supportive forces for the cotton market.
The current USDA forecast for U.S. cotton production is 15.5 million bales, and the possibility of the number getting smaller over time has increased because of the severe drought in West Texas. The current harvest figure is two million bales lower than the 2021/22 number and is equal to the five-year average for U.S. cotton exports (2017/18-2021/22). On top of exports, the U.S. will need to supply domestic mills with 2.5 million bales. In 2020/21, the U.S. had a severely drought-impacted crop, when the harvest was only 14.6 million bales. During the period the U.S. exporters could sell more to the overseas, as a good quantity of stocks were accumulated in the previous year. The opening stocks for the U.S. cotton remain lower for the 2022/23 crop year. The U.S. is the world’s largest exporter of cotton hence this may offer some support to the global cotton prices.