USDA Aug supply and demand report

Sep 19, 2023

In the report, there were relatively small adjustments to the global cotton supply and demand for the 2022/23 season. Global production was revised upwards by 70kt, including 40kt higher on Brazilian cotton. Global consumption was increased by 150kt, largely driven by a rise of 110kt in China. Export and loss numbers were revised downwards by 110kt and 80kt respectively. As a result, the ending stocks was adjusted to increase by 40kt.

For 2023/24 season, the monthly change was obvious. Global cotton production was largely lower by 590kt, mainly due to the 550kt lower of U.S. cotton production. This adjustment in US cotton production was expected due to long-term speculation regarding high temperatures and drought in major cotton belts. However, the extent of the downward revision, even lower than the 2022/23 season, raises suspicions of whether it is an overcorrection.

EPS production is stable, with limited new capacity
U.S. cotton production is largely lower, speculation or correction

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