Statistics

Recent price movement

NY futures and the A Index surged higher in recent trading. Prices in India and Pakistan also increased， while values for China fiber were stable.

Price for the May NY futures contract rose from 63 cents/lb in recent trading to levels over 66 cents/lb. Prices for the December contract advanced to values over 65 cents/lb.

The A Index followed movement in NY futures， climbing from values near 68 cents to those near 73 cents/lb.

The CC Index was virtually unchanged over the past month， with prices holding to levels between 98 and 99 cents/lb in international terms and between 13，440 and 13，500 RMB/ ton in domestic terms.

Indian spot prices for the Shankar-6 variety managed to increase from values near 63 cents/lb （31，000 INR/ candy） in early March to 69 cents/lb in recent trading （33，500 INR/candy）.

Pakistani spot prices also strengthened， with values international terms increasing from levels near 60 cents/ lb to those near 63 cents/lb in international terms. In local terms， prices increased from 5，000 PKR/maund to 5，300 PKR/maund.

Supply， demand， & trade

At the world-level， estimates for sup- ply and demand were nearly unchanged in the latest report. The global production figure was reduced only 17，000 bales （to 119.2 million）. The global mill-use figure was increased 85，000 bales （to 111.0 million）. With production and consumption essentially unchanged， the global ending stock figure was essentially stable（+27，000 bales） at 110.1 million bales.

At the country-level， there were several notable revisions to production estimates. The largest change was for India， where the harvest figure was reduced 500，000 bales （to 30.0 million）. Expectations for the Uzbek crop were lowered（-100，000 bales to 3.9 million）. These reductions were nearly offset by increases to crop estimates for the U.S. （+216，000 bales to 16.3 million）， Mexico （+146，000 to 1.4 million）， and Pakistan （+100，000 to 10.6 million）.

In terms of mill-use， significant adjustments included those for Turkey（-150，000 bales to 6.2 million）， Brazil（-100，000 to 3.9 million）， and Hong Kong （-100，000 to zero）. Countries with increases in consumption figures included India （+200，000 bales to 24.2 million）， Vietnam （+200，000 to 3.9 million）， and Pakistan （+100，000 to 10.6 million）.

There were a series of alterations to country-level trade estimates. Export forecasts were lowered for India （-300，000 bales to 3.9 million）， Australia （-200，000 to 2.8 million）， and Mali （-100，000 to 700，000） and were increased for Greece（+150，000 bales to 1.1 million） and Turkmenistan （+100，000 to 700，000）. Import forecasts were lowered for Hong Kong （-225，000 bales to zero）， and Brazil（-100，000 to 50，000）， and were increased for China （+200，000 to 7.5 million bales） and Vietnam （+150，000 to 4.1 million）.

Next month， the USDA will release its first complete set of estimates for the upcoming 2015/16 crop year.

Price outlook

As has been the case for the past several crop years， China and Chinese cotton policies can be expected to be influential on cotton prices around the world in 2015/16. A minor revision to the current support program for Xinjiang （60% of 2014/15 domestic production according to Chinas National Bureau of Statistics） was announced this week. This change reduced the price guaranteed to Xinjiang producers by 700 RMB/ton to 19，100 RMB/ton （-5 cents/lb to 140 cents/lb at current exchange rates）. Initial reaction to the announcement suggests that the decrease in support will not significantly alter planting in Xinjiang this spring.

At the time this publication was written， no statements had been released regarding changes to support levels outside of Xinjiang. If no announcement is made，it could be assumed the measures in place for 2014/15 will be continued next crop year. These measures limit payments outside of Xinjiang to 2，000 RMB/ton（15 cents/lb）. The combination of current market prices and this level of support are generally considered not to be attractive， and steep declines in acreage are expected in eastern growing areas. A recent survey by the China Cotton Association suggests that planted acreage in the Yangtze River valley could drop 43% and that acreage in the Yellow River valley could drop by 46%. With a much smaller reduction in acreage expected in Xinjiang （-7%）， this survey suggests the total reduction in Chinese acreage could be 24%. The percentage decrease in Chinese production could be smaller than the decrease in total planted acreage since Xinjiang has a higher yield than other provinces and there is a much smaller reduction in planted acres expected in Xinjiang.

Under normal market conditions， the production deficit in China implied by such decreases in acreage could result in increased Chinese import demand. However， with the massive accumulation of government reserves in recent years， this is not a normal market. The USDA estimates that China will have 65.1 million bales of cotton stored in warehouses at the end of the 2014/15 crop year （186% of 2014/15 mill-use）， which is more than sufficient to make up for any production deficit. No announcement has been made regarding any upcoming series of auctions， even though in recent years sales from the Chinese reserve system have tended to occur in the springtime. An eventual announcement for Chinese reserve sales will most likely influence global price direction for cotton.