The forecast of cotton supply and demand of the US Department of Agriculture (USDA) for FY 20/21 gives strong positive vibes to the cotton cultivators and the industry in the USA.
Due to strong US cotton exports in December ’20, the cotton export reached 15.25 million bales in the FY 20/21.
It’s worth noting here that, in the first 5 months of FY 20/21 (August-December period), China accounted for the largest proportion of the USA-grown cotton and thereby accounted for almost half of USA cotton exports in the period – the highest in 7 years. The total cotton import of China was worth 10.50 million bales.
Moreover, China’s cotton consumption is expected to increase by 5.5 million bales year-on-year (Y-o-Y) to 38.5 million bales in the mentioned period, accounting for more than one-third of global consumption.
USDA believes that under the influence of the first phase of the Sino-US trade agreement, China has continued to import large amounts of US cotton in the FY 20/21, which reversed the situation that Brazilian cotton replaced US cotton in the previous 2 years.
Although the price of the US cotton is higher than that of Brazil and India, the shipment of the US cotton to China in December 2020 still rose by over 2.3 million bales Y-o-Y.
However, US cotton exports to Vietnam and Bangladesh have decreased in the August-December ’20 period, but USDA still raised its forecast for US cotton exports this month buoyed by the strong import demand from China.