USDA September Report: Global cotton landscape shifts

The United States Department of Agriculture (USDA) released its September 2024 World Agricultural Supply and Demand Estimates (WASDE) report, offering a revised outlook on the global cotton market for the 2024-25 marketing year. The report reveals adjustments in production, consumption, and ending stocks figures, reflecting evolving dynamics across major cotton-producing and consuming countries.

Global production expected to fall

Global: Production is projected to reach 120.4 million bales, a slight decrease from the August estimate. This adjustment is primarily attributed to lower output forecasts in India and the United States.

India: Production is now pegged at 26.5 million bales, down from the previous estimate. Adverse weather conditions and pest infestations have impacted yields in some regions.

United States: Production is estimated at 18.0 million bales, reflecting the influence of drought conditions in major growing areas.

China: Production remains stable at 6.5 million bales, supported by favorable weather and government policies.

Consumption on the rise

Global: Consumption is projected to reach 120.7 million bales, slightly higher than the August estimate. Strong demand from major textile-producing countries is driving this upward revision.

China: Consumption is estimated at 39.0 million bales, reflecting the robust textile industry and growing domestic demand.

India: Consumption is projected at 26.0 million bales, supported by a thriving textile sector and increasing population.

Pakistan: Consumption is estimated at 10.0 million bales, driven by the textile industry's export orientation and domestic consumption.

Ending stocks to be lower

Global: Ending stocks are projected to reach 81.2 million bales, slightly lower than the August estimate. The downward revision reflects the adjustments in production and consumption forecasts.

China: Ending stocks are estimated at 34.5 million bales, accounting for a significant portion of global stocks.

India: Ending stocks are projected at 5.5 million bales.

United States: Ending stocks are estimated at 3.5 million bales.

Table: Global cotton supply and demand (million bales)

Implications for India

The USDA report highlights a mixed outlook for India's cotton sector. While the country remains a major player in the global cotton market, the downward revision in production underscores the vulnerability of the sector to weather-related risks. The reduced production estimate may put upward pressure on domestic cotton prices, potentially impacting the textile industry's input costs.

The downward revision in production reflects the impact of unfavorable weather and pest pressures. However, consumption remains robust, driven by a strong textile industry and growing domestic demand.

In the US however, drought conditions have affected yields in major cotton-growing regions, leading to a lower production estimate. Despite this, consumption is expected to remain stable, supported by domestic textile mills and export demand. In China, production is stable, due to favorable weather conditions and government support. And consumption is projected to increase, driven by a thriving textile industry and growing domestic market.

The USDA's September WASDE report highlights a tighter global cotton market for 2024-25. Reduced production, coupled with increased consumption, is leading to a significant decline in global stocks. These trends are likely to influence cotton prices and trade dynamics in the coming months. Market participants will be closely watching weather patterns, pest pressures, and economic developments to assess the evolving cotton outlook.