The U.S. Department of Agriculture’s January supply and demand forecast states that as of December 30, U.S. cotton sales (cumulative shipments + pending shipments) for 2021/22 and this year’s export forecast of 15 million bales are basically consistent with historical levels for the same period. However, as of December 30 (the first 22 weeks), the proportion of U.S. cotton cumulative shipments to expected exports was indeed the second lowest since 1974. At the same time, unshipped volumes accounted for the second-highest share of expected exports in the past decade. Simply put, the large number of unshipped contracts for U.S. cotton so far has offset the low actual shipments.
As of now, the quantity of U.S. cotton waiting to be shipped to China, Turkey and Pakistan is significantly higher than the same period last year, and a large part of the sales to China will be shipped in the second half of this year. Pakistan has significantly increased its cotton position in 2020, and its import volume has increased significantly in 2020/21, resulting in a large increase in the ending inventory of 2020/21 and the number of contracts signed in 2021/22. At the beginning of the 2021/22 season, the quantity of U.S. cotton waiting to be shipped to Pakistan has almost doubled year-on-year, reaching a record high. U.S. cotton’s signing of contracts with Turkey is very strong because Turkey’s domestic consumption exceeds production by 800,000 bales, and cotton imports this year are expected to reach the second highest level in history.
Although the total export volume of U.S. cotton can match the export forecast, the progress of U.S. cotton shipments is far behind at this stage, especially in the past two months, the U.S. opening stocks have been extremely low, the harvest and processing of new cotton have been severely delayed, and logistics problems have been delayed. To solve the problem, as of the end of December, U.S. cotton shipments had decreased by 45% year-on-year, and this was when exports were expected to decrease by 10% year-on-year. Among the top ten destinations for U.S. cotton exports, exports to eight countries decreased, exports to China fell by 70%, and exports to Vietnam fell by half.
From August to November 2021, China’s cotton imports decreased by nearly 60% year-on-year, and the proportion of US cotton also dropped from 61% to 42%. The reason for the decrease in China’s import demand is that the country has put in reserve stocks of imported cotton. As of mid-December 2021, Vietnam’s cotton imports have increased by 15% year-on-year, but US cotton imports have decreased by 55% year-on-year. The market share lost by US cotton has been occupied by Australian cotton. Except for China and Vietnam, U.S. cotton exports to other major regions have increased year-on-year, especially to Central America. Logistics issues and the U.S. ban on China’s Xinjiang cotton may have spurred cotton consumption in Central American countries.
Since the outbreak of the epidemic in February 2020, the seasonal characteristics of U.S. cotton exports have also changed for better or worse. Delayed harvest of new cotton is now entering the export channel, and U.S. cotton shipments later this year are expected to be higher than historical levels for the same period. Based on current conditions, US cotton shipments are expected to exceed 11.4 million bales for the remainder of the 2021/22 season, a year-on-year increase of 30% and 25% higher than the average for the same period in the past decade. Since 1974, U.S. cotton shipments have done this only twice.
In addition to logistics issues, tight beginning stocks of U.S. cotton this year and delays in new cotton inspections have also led to slow shipments at the beginning of the year. After logistics issues and inspections gradually normalize, U.S. cotton shipments will accelerate significantly to meet current export forecasts. From August to December 2020, U.S. cotton exports increased by 34% year-on-year and 66% from two years ago, setting a record high for the same period in history.
</p
