Washington DC, United States – The forecast for Pakistan’s imports is raised to 2.0 million bales, its highest level in the last 8 years. Reports of poor crop conditions in Pakistan caused pessimism regarding crop size among many observers over the last several weeks, pessimism which has been confirmed by falling deliveries of seed cotton to gins. Pakistan was widely expected to see higher imports of raw cotton despite a slightly higher import duty, especially as duties on yarn imports were raised substantially. However, recent reports on cotton shipments from India to Pakistan (at least 600,000 170-kg Indian bales in November alone) indicate that PakistanΆs import demand may be substantially larger and may impact global markets sooner than previously anticipated.

Outside of Pakistan, the continuing shift of spinning capacity from cotton-producing China to more import-dependent countries such as Vietnam and Bangladesh has also raised the forecast for global trade. Beyond India, stronger recent demand will benefit Brazil and various West African suppliers especially due to their competitive pricing and relatively large available supplies.

Overview

For 2015/16, world production is lowered substantially, mostly due to changes in Pakistan and China. Consumption and ending stocks are both marginally lower. Trade is raised 1 million bales, mostly on higher exports from India and Brazil. U.S. production, exports, and ending stocks are lowered. The U.S. season-average farm price is projected unchanged at 59 cents/pound.

Prices

The A-Index and U.S. spot prices continue to drift sideways or rise slightly on moderate buying activity.

Export Sales

For the week ending Nov. 26, weekly exports for all cotton rose to 1.74 million running bales versus 1.56 million last year, while sales rose to 2.99 million running bales versus 5.24 million last year. Net sales for the week ending Nov. 26 reached a marketing year high of 289,488 running bales for all cotton.

2015/16 TRADE OUTLOOK

Major Importers:

• Bangladesh is raised 200,000 bales to 5.9 million on strong mill demand and larger recent shipments from India, to become the worldΆs largest importer.
• China is cut 250,000 bales to 5.5 million on declining use and the weak pace of trade to date.
• Pakistan is boosted 700,000 bales to 2.0 million on a smaller harvested crop and strong purchases for import.
• Vietnam is up 350,000 bales to 5.2 million on rapidly rising mill use and new textile investments.

Major Exporters:

• Australia is raised 100,000 bales to 2.6 million on a faster pace of trade and a higher production forecast.
• Brazil is increased 200,000 bales to 4.2 million on reports of higher recent sales.
• Greece is lowered 100,000 bales to 900,000 on a smaller harvested crop.
• India is hiked 900,000 bales to 5.3 million on robust shipments to Pakistan and Bangladesh.
• United States is reduced 200,000 bales to 10.0 million on a smaller forecast crop and pace of commitments to date.

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Source: United States Department of Agriculture