Cotton prices edged down in January, according to the U.S. Department of Agriculture. The seven-market U.S. average cotton spot price fell from $0.591 per pound on Dec. 31 to $0.584 on Jan. 30, a 1.3% decline.
Though demand for cotton has being revived by the lower prices, there still remains tremendous downward price pressure from the worldwide cotton glut.
Cotton stocks are projected to reach a new record in the current season, rising 6 percent to 108.6 million bales. Global cotton mill use for 2014-2015, on the other hand, is forecast to rise by only 3 percent above last year, to 112.2 million bales.
China has begun to release large portions of the cotton reserves it stockpiled during the buying program it implemented for several years to support prices. In September 2014, the Chinese government stopped buying cotton from farmers for national reserves, opting instead to give direct subsidies to farmers, and to reduce cotton import quotas in order to stimulate demand for domestic fiber.
India, the world’s second largest exporter, has recently surpassed China in cotton production as acreage there remains stable to slightly up. India’s acreage plans for 2015/2016 will have significant impact on global production and prices given its limited warehousing capabilities.
Global cotton trade is expected to decline for the second consecutive season, to 34 million bales, 16 percent below the prior season.
The latest USDA cotton projections for 2014/15 indicate that global cotton production will be 119 million bales, slightly below the prior season as yield reduction is expected to more than offset increased planted area. Last month, the U.S. cotton crop forecast was increased slightly to 16.1 million bales, 3.1 million bales above the 2013 crop. China’s crop forecast was estimated at 30 million bales, down by almost 3 million from last year.
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