USDA Outlook for US Domestic Cotton Situation

Although the area decreased in 2012, the U.S. cotton output remained unchanged

In the U.S. Department of Agriculture’s July cotton supply and demand report, U.S. cotton production forecast for 2012 is maintained at 17 million bales, which is expected to increase by 1.4 million bales from 2011 production. Although the planting area was reported to be reduced according to the June planting, from the current situation, the abandoned area and the yield were adjusted, so the output remained unchanged.

Although some parts of the cotton belt still suffered drought this year, these areas have greatly improved compared with 2011. Abandoned area and yields were based on the average data for 2009-11 and regional weighting; however, the harvested area was further adjusted to include an estimated 30% abandonment rate in the southwestern region.

According to the June Acreage Report, U.S. producers stated that they had planted or planned to grow more than 12.6 million acres of cotton in 2012, which is 4% less than the March planting intention report and 14% less than in 2011. Although the planting area is smaller than last year, the harvested area is expected to increase by 10% to 10.4 million acres. Compared with the previous year, the southwestern region has improved soil conditions and improved cotton growth. The rate of abandonment is expected to be significantly lower than in 2011. In 2011, the area planted in this area was reduced by more than 60% from the intended area. From a national perspective, the rate of abandonment in the United States in 2012 is expected to be 18% (2.2 million acres), which is higher than the long-term average abandonment rate of 13%. Last year's abandonment rate reached a record high of 36% (5.3 million acres), after the highest abandonment rate was 27% set in 1933.

The area of ​​upland cotton in various regions of the cotton growing belt in 2012 is expected to decrease, ranging from 11% to 22%, because higher prices of competing crops have tempted farmers to reduce cotton area. The area south of the West is approximately 7.2 million acres (a 11% reduction); the area abandoned in 2012 is expected to be higher than the average abandonment rate again. In the southeast and delta regions, the area is estimated to be approximately 2.7 million acres (22% reduction) and 2.1 million acres (13% reduction), respectively. In the west, the area of ​​upland cotton is expected to decrease by 20% compared to 2011 to 400,000 acres. In addition, the area of ​​ultra-long staple cotton (mostly planted in the west) is expected to be 235,000 acres, which is 23% less than in 2011.

The growth of the US cotton crop in 2012 continued to exceed the average of the previous year and the 5-year period. As of July 8th, 70% of cotton buds, compared with 56% in the previous year, the average bud rate in 5 years is 64%. Similarly, as of the beginning of July, the fruit set rate was 23%, compared with 18% in 2011 and the average fruit set rate in 2007-11 was 19%. At the same time, U.S. cotton grew at the beginning of the year over the same period of last year, similar to the five-year average. As of July 8, 44% of US cotton fields were rated as “good” or “excellent”, compared with 28% last year, and only 18% were rated as “poor” or “very poor” compared to Below, the proportion in 2011 was 42%.

U.S. output is currently forecast at 785 pounds per harvested acre, slightly lower than last year's final projected yield. In August, the National Bureau of Agricultural Statistics of the US Department of Agriculture will release its 2012 cotton production survey results for the first time.

Cotton demand and inventory are adjusted

As 2012/13 is approaching, the demand for the next year will be slightly adjusted this month; the total cotton demand in 2012/13 is estimated at 15.5 million bales, which is 600,000 higher than the latest 2011/12 forecast. This month, 2012/13 U.S. stocks rose by 300,000 bales, as foreign import demand is expected to increase and support exports to 12.1 million bales. Demand for US textile mills in 2012/13 was slightly reduced to 3.4 million bales, reflecting the recent report on the start-up of textile mills. This month's report reduced the forecast for 2011/12.

Although the global cotton trade is expected to shrink in 2012/13, the market share of the United States is expected to be higher than the 2011/12.2012/13 US export supply is expected to be larger, and the planting area of ​​some of the major cotton-producing countries will decrease, and the competitiveness will decrease. According to the current forecast, the United States is expected to account for 32% of world cotton trade, compared with 27% last year and 39% in 2010/11.

According to the latest supply and demand forecasts, the 2012/13 inventory is expected to increase for the second consecutive year, from 3.3 million bales at the beginning of the year (started on August 1) to 4.8 million bales at the end of the year. Just as actual stocks will increase in 2012/13, the stock-to-use ratio is also expected to increase from 22% in 2011/12 to 31% in 2012/13, setting a four-year maximum ratio. The 2012/13 upland cotton farm price is expected to be between 60-80 cents/lb compared to 91 cents in 2011/12 and 81.5 cents in 2010/11.