Last week’s release from the US Department of Agriculture showing cotton supply/demand numbers and projections paints a grim picture for cotton farmers across the globe. Prices remain dismal for cotton farmers. New crop December futures have fallen back to 59 to 60 cents per pound. Price direction will depend largely on demand and exports and US crop size and condition.
Some of the report’s highlights include:
- The 2020 crop is still projected at 19.5 million bales.
- US exports for the 2019 crop year remain at 15 million bales.
- US mill use for the 2019 crop year was lowered 200,000 bales.
- US mill use for the 2020 crop year was also revised downward by 100,000 bales.
- World demand for the 2019 crop year was revised down by 2.35 million bales to only 102.65 million bales, which is 17% less than 2018 and the lowest since 2003.
- World use is expected to rebound for the 2020 crop year but the USDA report lowered that increase by 2 million bales.
- Ending stocks for the 2020 crop year are projected to top 104 million bales, almost 5 million bales higher than for 2019 and the largest stocks since 2014 and second highest on record.
“The report suggests that rebound in demand/use from the coronavirus pandemic may be slower than earlier projected,” analysts say.
“We need to think of ways to invigorate the US textile mill industry so we are not as dependent on exports. Large stocks in China used to be the problem. Stocks in the ROW (Rest of the World) are now the problem.”