In January, the U.S. Department of Agriculture forecast that U.S. cotton production this year would be raised by 438,000 bales to 14.7 million bales. U.S. cotton production and ending stocks have been raised for three consecutive months, while global cotton consumption continues to decline. The main contract of ICE cotton futures stands firm at 85 US dollars. cents/pound, and the attempt to break through 90 cents/pound caused suppression.
Industry analysis shows that since mid-November, ICE futures have fluctuated and fallen every time they rebounded, and the highs have continued to fall. The short-term support for ICE from the financial, technical and policy aspects has weakened, and the market may fall below 80 cents/pound in stages. Opportunities for domestic cotton textile companies and traders to enter the market are gradually coming.
Judging from feedback from some international cotton merchants and cotton trading companies, there are several reasons for the continued upward revision of U.S. cotton production forecasts:
First, despite the overall decline in grade and quality indicators of U.S. cotton this year, the yield per unit area is higher than in the previous two years, reaching 947 pounds/acre, a record high, especially in the southeastern and central-south cotton areas.
Second, the proportion of abandoned seeds and harvests caused by long-term drought in the southwestern and western cotton regions of the United States has been magnified. As harvesting, processing, and sorting progress continue to advance, data in areas with low yields have gradually been corrected. From December 30 to January 5, 108,500 tons of new flowers were graded and inspected this year in the United States, still showing a strong growth momentum year-on-year.
Third, the U.S. cotton planting area in 2022 may be slightly higher than the expectations of U.S. growers and industry insiders. Since 2022, USDA has continuously raised its forecast for US cotton planting area, from 12.5 million acres in June (an increase of 11% year-on-year) to 12.48 million acres in August, and then to 13.79 million acres in September (an increase of 11% year-on-year). (another increase of 1.31 million acres), and as yields increase, the increase in total production will “come naturally”.
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