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In the 2023/24 U.S. cotton market, production soars while consumption dips, resulting in higher ending stocks. Meanwhile, the global stage witnesses a boost in cotton output, with lower consumption but steady trade dynamics, notably driven by China.

U.S. Cotton Market

Production and Stocks: The U.S. cotton balance sheet shows higher production, with a slight decrease in consumption and increased ending stocks. Total production is up by 273,000 bales, reaching 13.1 million bales. Despite lower production in Texas, other regions offset this decline.

Consumption: Domestic mill use is down by 100,000 bales due to recent consumption patterns, while exports remain unchanged. Consequently, ending stocks are 400,000 bales higher, reaching 3.2 million bales, which represents 22.5 percent of use.

Price: The forecasted season-average price for upland cotton in 2023/24 is reduced by 3 cents to 77 cents per pound.

Global Cotton Market

Production and Stocks: Global production for 2023/24 is projected to be 850,000 bales higher. This increase is due to larger expected crops in various countries, including Afghanistan, the United States, Argentina, and Paraguay, which offset reductions in Spain and Mexico. Beginning stocks are also higher, primarily due to a production increase in India based on data from their Committee on Cotton Production and Consumption.

Consumption: Global consumption is 500,000 bales lower, influenced by reductions in Vietnam, Turkey, and the United States.

Trade: Although there is a 500,000-bale increase in China’s projected imports, world trade remains relatively stable from the previous month. Declines in Vietnam, Turkey, Korea, and Thailand are balancing out this increase.

Ending Stocks: 2023/24 global cotton ending stocks are projected to be 1.6 million bales higher than in October, totaling 81.5 million bales. China's higher imports largely contribute to nearly one-third of this increase, anticipated mostly for the State Reserve.

Conclusion

The cotton market showcases adaptability with higher U.S. production, yet uncertain consumption. On the global front, the resilience of cotton farming becomes evident as larger crops offset consumption drops. China's influence in trade, stockpiling, and imports is a significant factor to watch, reflecting the evolving dynamics of the cotton industry in the upcoming year.

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