Page 23 - TEXtalks International July/August 2022

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Global cotton trade and

consumption are down again

2012/22 cotton trade and consumption are down again this month, reflecting recently published trade
data and evolving expectations for the rest of the marketing year. Imports are lowered for the seventh
consecutive month and consumption for the fourth consecutive month, especially for top cotton
consumers including China, Pakistan, Vietnam, and Bangladesh. Prospects for the world's largest
importing country, China, have declined notably since the start of the calendar year.

Lower production, late crops, logistical delays, and stalled negotiations regarding late shipments also
impede global trade. Major exporters, including India and Australia, are dealing with these issues in the
current marketing year. India's production is down; therefore, the world has fewer supplies available to
ship, and Australia's crop is late than expected and is facing delayed shipments. The NY/ICE market
continues to be volatile, with prices for December locking on the limit decrease on the day the USDA
report was released (July 12), Cotton Incorporated said in its Cotton Market Fundamentals & Price
Outlook for July 2022.

Similar to NY/ICE futures, there have been two price series for the A Index to watch during this
transition period from 2021-22 to the 2022-23 crop year. Values for the 2021-22 version of the A Index
fell from 161 cents/lb on June 21 to below 130 cents/lb by July 7 (-19 per cent). Values for the 2022-23
version of the A Index, referred to as the Forward A Index, fell from 125 cents/lb on June 23 to 106
cents/lb on July 7 (-15 per cent).

Pakistani spot prices began decreasing in early June. From levels near 139 cents/lb, they have fallen
to those 94 cents/lb in the latest trading (-32 per cent). In domestic terms, prices recently fell from
22,500 at the start of June to 16,000 PKR/maund (37.32 kg) (-29 per cent). The PKR weakened from
198 to 207 PKR/USD between early June and the present. Indian spot prices (Shankar-6 quality)
decreased from 164 to 142 cents/lb between June 17 and July 12 (-13 per cent). In domestic terms,
the drop was from 100,000 to 85,000 per candy of 356 kg each (-15 per cent). The INR weakened
marginally against the USD, from 78-79 per USD.

2022/23 Outlook
Global production is lowered from 1.2 million bales to just over 120 million bales, with a marked decline
in the US crop and a slight decline for Brazil. Global use is down to 1.6 million bales due primarily to
declines in Bangladesh, China, India, and Vietnam, and ending stocks are increased by 1.5 million
bales. Overall, the global trade is down, with imports and exports decreasing by 1.1 million bales each.
The US balance sheet shows lower production, exports, and ending stocks. Abandonment in Texas
(which accounts for more than one-half of US plantings) is expected to surge. The projected US
season-average farm price is unchanged at 95 cents per pound.

July/August 2022