The 2021/22 global outlook for cotton production is down with a significantly smaller crop in Pakistan more than offsetting larger crops in Benin, Turkey, and Uzbekistan, the USDA said in its latest monthly report on world agriculture.
Use is mostly unchanged, it said, adding that ending stocks are down more than 1.0 million bales on fewer supplies in India, Pakistan, and China.
Global trade is up slightly with higher imports for Pakistan and Vietnam more than offsetting lower projected volumes for China. U.S. production is up marginally to 18.3 million. Exports and use are unchanged for the second consecutive month, with ending stocks also unchanged. The U.S. season-average farm price is unchanged at 90 cents per pound, the report said.
Global cotton prices fell since last month’s WASDE following downward movements on the Intercontinental Commodity Exchange’s March 2022 contract and new crop supplies arriving to major markets.
An additional factor included the onset of the Omicron variant which negatively affected prices of major stock market indices and futures; for example, the December 3 S&P Retail Select Industry Index was 6 percent lower compared with the previous week.
Rapid and volatile downward movements in major U.S. stock indices incentivised speculators to liquidate their long positions and lowered open interest in the March 2022 contract. Nonetheless, the A-Index is nearly 40 cents above last year’s level, signifying prospects for robust global consumption relative to the previous year as 2021/22 global consumption is forecast up more than 3 million bales, the USDA added.