Global cotton production increases, demand remains low

John Robinson, Extension economist, cotton marketing, Texas AgriLife Extension 

The federal government shutdown resulted in an economic information gap over the month of October. It may take a few weeks before the regular monthly and weekly patterns of information flow are restored. These include weekly U.S. cotton export data from USDA Foreign Ag Service, weekly crop condition, crop progress and ginning data from USDA National Agricultural Statistics Service and weekly speculative and hedging information from the federal Commodity Futures Trading Commission.

What was most recently restored was NASS’ monthly crop production report and the World Agricultural Supply and Demand Estimates report. The Nov. 14 WASDE report had the potential for some surprises. As it turned out, the adjustments to cotton supply and demand forecasts were not that surprising after all.

First, there was a big upward revision in cotton production around the world, amounting to a 2.4 million-bale increase. The U.S. accounted for 900,000 bales worth of this increase. However, given the good growing season and open, idyllic harvest weather this fall, I am not surprised by the increase. The 2-cent decline in Intercontinental Exchange cotton futures for the week ending Nov. 14 suggests the market was anticipating the production increase.

The other story of this WASDE report was the reflection of poor demand. World consumption barely changed between September and November. Given low prices, one would think U.S. cotton might attract more business. But the weak consumption numbers suggest expectations of economic slowdown.