John Robinson, Extension economist, cotton marketing
USDA’s June WASDE report happens during that three-month period (May through July) when the old crop picture is wrapping up and the new crop outlook is really too far off to call. As such, there was little reason to expect either many or large changes in either the old or new crop numbers, compared to the May numbers. And there weren’t many or large changes in either, as it turned out.
There was a little old crop revisionist history to start off. In 2023/24, world beginning stocks were 250,000 bales higher compared to May, owing to increases in Central Asia (+310,000) and less cuts in China (-120,000). The June supply adjustments also saw 210,000 more bales of world production, month over month, mostly in India (+200,000). World imports were cut 460,000 bales, mostly in Turkey (-200,000), Pakistan (-100,000), and several other countries. These combined to outweigh a 100,000-bale increase in Vietnamese imports, month over month.
The June U.S. balance sheet for the 23/24 marketing year was changed by demand-side adjustments compared to the previous month. U.S. old crop exports were cut a significant 500,000 bales to jibe with the recent slow pace of export shipments. U.S. domestic consumption was increased 50,000 bales, for the second month in a row. The net effect was a 450,000 increase in U.S. ending stocks, to 2.85 million bales. The monthly adjustment would ordinarily be judged as price weakening but, in this case, the cut in export shipments probably implies a rolling of exports into the next marketing year. And the resulting level of old crop ending stocks is still relatively tight.
As I’ve already mentioned, the new crop adjustments were minor, mainly because it’s too early to tell. The June WASDE is typically only a place holder for the new crop supply and demand projections. USDA makes their assumptions about new crop supply and demand in May. Then they usually keep with those assumptions until they have hard data on planted acreage, abandonment, and yield.
The June 2024 WASDE report was no exception. The only adjustment to the new crop U.S. balance sheet was the higher carry-in from the 2023/24 marketing year. The U.S new crop production guestimate was unchanged from May, implying a not particularly bullish outcome of 4.1 million bales of ending stocks.
In the good old days, USDA would conduct field sampling of cotton fields starting in August. This data source was potentially a useful update to the previous assumptions. However, that data collection has unfortunately been discontinued, so the market will have to wait for classing and ginning data in the fall to clarify the new crop production picture.
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