Surplus World Cotton Supply Continues

September 14, 2012

The September USDA report increased world cotton 2012/13 carryover to a record and reduced mill use slightly. Therefore, the cotton market continues to deal with surplus supply and weak demand. December ’12 futures are expected to trade in the 65 to 75 cent per pound range.


The report narrowed expected 2012/13 season farm price range by one cent on each end to a range of 62 to 78 cents per lb.  The average price will likely be below 70 cents.

The U.S. crop was reduced sharply to 17.1 million bales.  But, a 300,000 bale decrease in estimated exports partially offsets lower production.  Carryover stocks still remain at a plentiful 5.3 million bales.


With nearly half the Texas cotton acreage rated by USDA as very poor or poor, the U.S. crop will likely decrease some more to below 17.1 million bales.  The Texas crop is expected to produce less than USDA’S estimate of 6.1 million bales.

Even so, export demand for U.S. cotton is weak and uncertain, depending on Chinese policy regarding their huge stockpile of cotton.  Estimated production in China is 31 million bales, consumption only 38 million, and 2012/13 carryover stocks 35.5 million.

China holds 46% of the world’s carryover stocks.  Therefore, China has sufficient cotton to impact international cotton prices for several years.

For the 2013/14 crop year, strong wheat, corn, sorghum, and soybean prices are expected to gain a considerable amount of acreage from cotton.  Growers in the U.S. may decrease cotton acreage by 30% from the 12.4 million this year to 9 million acres.

As such, a normal crop would be around 14 million bales for the 2013/14 season.  With domestic use less than 4 million, there would be about 10 million bales for export plus 5.0 million carried over from the 2012/13 season.

Next year’s world acreage should decrease enough to reduce carryover at least 20 million bales.  This season’s 83.7 million world acres would need to drop at least 15 million to around 68.7 million acres.  The smallest acreage in recent years was 74.5 million in 2009/10 that produced 102 million bales.

Thus, for the 2013/14 season, it appears that cotton supply may not decrease enough to boost December ’13 futures above the mid-eighty cent range.

Given the high cost of cotton production, U.S. growers will take a close look at their financial situation and crop alternatives.  It is not too early to prepare a marketing plan for the 2013 season.  Current grain and soybean prices are very attractive relative to cotton.


Ag Market Network Teleconference, Date: July 27, 2012 Time: 7:30 a.m. Central Time 

New York Cotton Market Roundtable:  A distinguished panel of cotton experts will discuss today’s cotton market, including: crop conditions, domestic demand, exports and farm policy. O.A. Cleveland, Carl Anderson, Jarral Neeper, Mike Stevens, and Patrick McClatchy 

Special Guest Speaker: Joe Nicosia, CEO, Allenberg Cotton 

The conference will be aired live over radio station KFLP 900 AM Floydada, Texas and KZIP 1310 AM Amarillo, Texas. You can listen live over the internet at You can listen to a recording around noon at


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