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March cotton

sharon johnson 12/17/2010 @ 8:32am Toll Free 1-866-513-5800 Local 770-992-5000 sharoncjohnson@cottoninfo.net

US EXPORTS

2010/11 Weekly sales totaled 198K bales with the largest buyers in descending order Bangladesh, Turkey, China, Indonesia, Mexico and Pakistan.  As of Dec 9, commitments had risen to 13.56 mln running bales or 89% of the USDA projection.   If weekly sales average 250K over the next 6 weeks, by the mid-point of the season (26th week occurs on Jan 28) the remaining 1.73 mln running bales of available US cotton will have been sold.  Shipments totaled 325K bales with China the largest recipient followed by Turkey, Thailand and Indonesia.   After 20 weeks, 3.35 mln running bales have been shipped or 22% of the official target.  To reach the USDA goal, weekly shipments must average 373K over the next 32 weeks vs the 168K average shipped per week thus far despite the early harvest and readily available cotton in the pipeline.  New crop sales of 60K bales were made to Turkey, Thailand, Mexico and Japan for a year to date total of 1.48 mln bales.

DISCUSSION

There is a heated discussion occurring within the US regarding the impact of continuing export sales.  This week’s smaller sales likely reflect the increased price level through last Thurs, Dec 9 suggesting next week’s sales should be at best the same and at worst much lower.  Cotton’s global high price is blunting demand for cotton, we know as much from the USDA Supply & Demand Reports from November and this month with more to follow January forward.  That does not mean cotton demand has or is being eliminated although some Asian mills had closed the past two months due to lack of cotton or their inability to pay for it.  We also know demand has increased for polyester and other synthetic fibers given their price run-up although measuring the increased use on any given day is all but impossible.

The argument is not whether all fiber demand is holding up but how much cotton usage is being hurt?  For instance, earlier this week Chinese yarn production data was released and at first blush, it was a strong figure.  But here is the rub, that figure of 2.467 mln tones which was the second highest on record was for all fibers including cotton.  Chinese mills have orders to fill and they are using various fibers to fulfill those orders.  Retailers have little choice but to accept the change in fiber content as well as a price increase since they are fully aware of the record increase in cotton’s price, lack of availability and in some instances poor quality.   Making the distinction that all fiber yarn production is strong but does not necessarily reflect high cotton content may seem like a minor distinction but goes to the heart of cotton vs all fiber demand not only in China but on a global scale.

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