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Weak Chinese demand impacts Australian cotton export
18
Nov '15
Although many cotton exporters' shipments have been affected thus far in 2015-16 by weak demand from China, the most notable impact has been felt by Australia, according to the latest cotton report released by the US department of agriculture (USDA).
 
Over the previous four seasons, Australia had shipped nearly two-thirds of its exports to China. However, since the harvest started for the 2015 crop, Australia's exports as a share of the crop are at a 10-year low, largely on very weak import demand from China.
 
Similarly, Australia's cotton shipments to nearly all other major markets are also down. Hence, in order to meet the current forecast, Australia's export pace during its typical out-of-market months from December to April will need to be well above levels established in recent years, says USDA report.
 
In contrast, the United States has thus far in 2015-16 managed to offset lower shipments to China with higher shipments to alternative markets in Vietnam, Indonesia, and Thailand, even as outstanding sales remain low, reflecting hand-to-mouth buying by major importers. 
 
Meanwhile, recent reports from Brazil and Turkmenistan indicate robust sales. Competitively-priced, quality varieties remain in demand, especially for export to destinations where mill use remains relatively strong, notably Vietnam and Turkey.
 
In its overview for 2015-16 season, USDA says world production is lowered, mostly due to changes in India, China, and Pakistan. It adds that consumption is slightly lowered, ending stocks are lowered, while trade is about even.
 
For the US, although production is down marginally, the season-average farm price is projected unchanged at 59 cents/pound. 
 
In terms of 2015-16 trade outlook, the report says Brazil's export is expected to increase (from the earlier projection) to 4 million bales on a faster recent pace of sales. Similarly, Turkmenistan's export is likely to touch 1.1 million bales owing to recent new crop auction sales and an early start to the official marketing season. On the other hand, Mali's exports would decline to 1.1 million bales on lower production and weak demand. Likewise, exports from Greece are projected to fall to 1 million bales on lower production.
 
On the import side, the report forecast a rise (from the earlier projection) in cotton import by Pakistan to 1.3 million bales due to substantially lower production. Mexico too, is facing lower production and its imports are likely to shoot up to 975,000 bales. However, tight spinning margins would reduce Indonesia's cotton imports to 3.1 million bales. (RKS)
 

Fibre2Fashion News Desk – India

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