Record U.S. shipments through December are supporting a stronger U.S. export forecast at 15.25 million bales, despite production falling 5.0 million bales from the previous year, the U.S. Department of Agriculture said in its latest monthly report.
China has accounted for almost half of U.S. exports in the first 5 months, with the country’s total imports forecast at 10.5 million bales, the highest level in 7 years.
Moreover, China’s consumption is expected to recover 5.5 million bales from the previous year and reach 38.5 million bales, accounting for more than one-third of world use in 2020/21, the report said, adding that China demand for U.S. cotton has been mostly led by the State Reserve and State-owned Enterprises (SOEs), which have likely accounted for more than three-fourths of total imports of U.S. cotton thus far in 2020/21.
Instead of sourcing from Brazil, the primary supplier in the previous two marketing years, the State Reserve and the SOEs have returned to the United States likely in part spurred by the Phase One Agreement.
Despite higher U.S. prices relative to Brazil and India (second and-third-largest exporters forecast in 2020/21), U.S. sales and shipments to China through December exceeded the previous year by more than 2.3 million bales, the report said.
These export volumes are notable considering higher exportable supplies for Brazil and India, where both countries have record carry in and Brazil’s 2020/21 exports are forecast at a record, it pointed out.
Australia, another significant supplier to China, witnessed exportable supplies decimated by a 2020 drought. Like the United States, Australia is a significant supplier of high-quality cotton to the world’s largest importer.
In addition, a recent political dispute between it and China has diminished demand for Australian origin and boosted imports of U.S. cotton.
U.S. exports are boosted this month and forecast to be mostly unchanged from the previous year due to a historic pace for shipments and resilient China demand, despite fewer shipments and sales to Vietnam and Bangladesh.