Due to an increase in ChinaΆs imports and strong sales/shipments to date, USDAΆs 2012/13 US export estimates were upped 350K to 13.6 million bales, pulling ending stocks down to 3.6 million.
The 2013/14 production was reduced by 500K to 13.5 million due to higher abandonment.
Smaller supply pulled exports down to 11 million but ending stocks are forecast at a very low figure of 2.6 million.
Besides the US, exports were upped for countries in the former Soviet Union, Africa, Australia and India due to the Chinese increase. No other notable changes were made to this crop year leaving carryout at 84.93 million.
ChinaΆs ending stocks stand at 50.01 million bales accounting for 59% of the world figure. New crop world production was down 600K with usage off 260K and higher carry-in helping to adjust ending stocks to 92.49 million, down 250K.
Chinese imports were lowered 1 million bales to 11 million and with no other changes other than from higher carry-in, their stocks rose to 58.93 million bales. Chinese stocks now command 63.7% of the world carry-out.
BOTTOMLINE RE PRICES: US numbers, in particular new crop, are friendly (old) if not bullish with next year. There is plenty of time for high US prices to hurt demand assuming foreign supplies can make up the difference. World numbers are neutral on a gross basis but ChinaΆs ever growing command of world carry-out is indirectly friendly to this year and more so to next. However, this level of stocks within China is not sustainable and the larger they grow, the more likely Beijing is to act.
US cotton futures moved higher after the reports finally hit most desks with July back above 90 cents and Dec trading to within 25 pts of 88.00. The Jul/Dec continues to soften taking some of the sting out of the friendlier aspects of the report.
Sharon C Johnson, @Copyright 2013
The information contained in this report is taken from sources we believe to be reliable but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only. Knight Futures bases its market recommendations
