Graham Soley, economist of USDA, delivers his report of The World and U.S. Cotton Outlook

The report is divided into 4 parts, including 2021/22 World Cotton Situation, 2021/22 U.S. Cotton Situation, 2022/23 World Cotton Outlook and 2022/23 U.S. Cotton Outlook.

1. 2021/22 World Cotton Situation

The report reviews production, consumption, trade situation, ending stocks, etc. Production increased in 2021/22, but opening stocks decreased by nearly 10 million bales (especially in India). Global consumption declined, in particular China witnessed the most serious decline. Global consumption dropped due to the COVID-19 pandemic, high inflation, and high cotton prices.  Global trade volume declined significantly, especially in terms of China's imports. Ending stocks also decreased, especially in India, where the Cotlook A index soared above 130 cents/lb, compared with a high of 85 cents/lb the previous year and a high of 71 cents/lb 2 years ago. The report compares cotton apparel and home textile imports over the past 10 months (August-May) in U.S., EU countries, U.K., Japan, Canada, and China with imports of these countries since 2017/18. The U.S. and EU countries saw sharp increase from the same period in previous years, while China were basically lower than the same period in previous years.　　

2. 2021/22 U.S. Cotton Situation

The report explains the 2020/21, 2021/22 balance sheet of U.S. cotton, which includes opening stocks, areas harvested, production, imports, exports, total supply, use, ending stocks, stocks-to-use, etc. The top 10 U.S. Export Markets in 2021/22 are China, Vietnam, Turkey, Pakistan, Mexico, India, Bangladesh, Indonesia, Peru, and Thailand.

3. 2022/23 World Cotton Outlook

Global cotton production is expected to grow in 2022/23, the increase in output is supported by cotton prices in India and China. Due to the slowdown of global economic growth, the global cotton consumption is basically flat compared with the previous year. The slightly increase in global trade volume was mainly supported by China. The ending stocks decreased slightly, and US saw the most obvious decline. The CotlookA index drifted down slightly from its previous 11-year high. Overall, global cotton consumption has exceeded output for 3 consecutive years. The report also analyzes the slowdown of cotton consumption from the macro level. The July 2022 International Monetary Fund Economic Outlook shows that the global economic growth rate in 2022 is 3.2%, and it is estimated that the figure will reduced to 2.9% in 2023, while the number in 2021 is 6.1%. In addition, view from the ratio of U.S. clothing/accessories sales to wholesale inventories and the ratio of U.S. clothing/accessories sales to wholesale inventories, the overall economy is in sharp drop since the outbreak of COVID-19 pandemic. In terms of inflation in the United States, since 2020, inflation soared all the way and hit historic high in recent months over the last 40 years. A slowing economy and high inflation are the important factors that affect consumption.

4. 2022/23 U.S. Cotton Outlook

Cotton production in the US is very likely to fall. In Soley’s report, US cotton planting acres is divided by regions, and cotton planting situation in major planting states like Texas, Oklahoma, and Georgia is introduced in detail. Besides, abandonment rates of recent years are analyzed, and the 2022/23 abandonment rate is expected to reach 43%, while the number of the previous year is only 8%. It can be said that abandonment rate will reach the maximum in recent years. The main cause is the dry weather, with about 66 percent of U.S. cotton production coming from areas experiencing drought conditions.

Finally, in the Q&A session, Graham Soley answers 3 questions regarding whether the USDA report on US cotton production has been adjusted clear, whether there is room for further decline of global cotton consumption in 2021/22, and whether the cotton consumption of China, India, Pakistan, Bangladesh, Turkey and other countries will see sharp decrease in 2022/23.