RECORD United States shipments of cotton through December are supporting a stronger US export forecast at 15.25 million bales (Mb), despite production falling 5Mb from the previous year.
According to the latest report from the USDA, China has accounted for almost half of US exports in the first five months, with the country’s total imports forecast at 10.5Mb bales, the highest level in seven years.
Moreover, China’s consumption is expected to recover 5.5Mb from the previous year and reach 38.5Mb, accounting for more than one-third of world use in 2020/21.
China demand for US cotton has been mostly led by the State Reserve and State-owned Enterprises (SOEs), which have likely accounted for more than three-fourths of total imports of US cotton thus far in 2020/21.
Instead of sourcing from Brazil, the primary supplier in the previous two marketing years, the State Reserve and the SOEs have returned to the US likely in part spurred by the Phase One Agreement.
Despite higher US prices relative to Brazil and India (second and-third-largest exporters forecast in 2020/21), US sales and shipments to China through December exceeded the previous year by more than 2.3Mb.
These export volumes are notable considering higher exportable supplies for Brazil and India, where both countries have record carry-in and Brazil’s 2020/21 exports are forecast at a record.
Australia, another significant supplier to China, witnessed exportable supplies decimated by a 2020 drought.
Like the US, Australia is a significant supplier of high-quality cotton to the world’s largest importer.
In addition, a recent political dispute between it and China has diminished demand for Australian origin and boosted imports of US cotton.
US exports are boosted this month and forecast to be mostly unchanged from the previous year due to a historic pace for shipments and resilient China demand, despite fewer shipments and sales to Vietnam and Bangladesh.
Grain Central: Get our free cropping news straight to your inbox – Click here