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Situation for 2011-2013 Crops

Situation for 2011-2013 Crops. Chinese government purchasing 75 million bales into reserves at well above world price Despite world production consistently exceeding use, prices traded in relatively narrow range, “A” Index averaging close to 90¢. China Absorbing Surplus.

lesley-zimmerman
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Situation for 2011-2013 Crops

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  1. Situation for 2011-2013 Crops • Chinese government purchasing 75 million bales into reserves at well above world price • Despite world production consistently exceeding use, prices traded in relatively narrow range, “A” Index averaging close to 90¢

  2. China Absorbing Surplus

  3. China Absorbing Surplus

  4. China Absorbing Surplus

  5. Production Outside China

  6. NCC Acreage Survey • Distributed on Dec 18 • Responses collected through Jan 17 • Asked for acres of upland cotton, ELS cotton, corn, soybeans, wheat, other crops in ‘13 and intentions for ’14; also asked price expectations

  7. Pre-Planting Market Signals

  8. U.S. Cotton Area

  9. U.S. Cotton Area

  10. 2014 Southeast Acreage Total may not add due to rounding.

  11. 2014 Mid-South Acreage Total may not add due to rounding.

  12. 2014 Southwest Acreage Total may not add due to rounding.

  13. 2014 West Acreage Total may not add due to rounding.

  14. 2014 ELS Acreage Total may not add due to rounding.

  15. U.S. Cotton Production

  16. International Area Outside China

  17. Cotton Production Outside China

  18. Mill Use Outside China

  19. U.S. Mill Use • ‘14 Farm Bill continues EAAP at 3 c/lb • Several new investments underway

  20. Cotton Mill Use Outside China

  21. China Absorbing Surplus

  22. China Supply & Demand

  23. Key Assumptions • Accumulating reserves ends with the ‘13 crop • Target price program planned for Xinjiang • Level speculated at 18,300 RMB/ton • Current reserve price at 20,400 RMB/ton • TRQ of approximately 4.1 million bales • Some additional quota for processing trade

  24. China Balance Sheet Million Bales

  25. China Absorbing Surplus?

  26. Cotton Trade

  27. U.S. Cotton Exports

  28. Competitive Export Markets • World trade- 35.8 mb in ‘14, down from 38.5 mb in ‘13 • U.S. market share at 28%, up from 27% in ’13 (34% share in ‘08-12) • For ‘14, U.S. exports at 59% of exportable supplies • Exports normally at 70-75% of exportable supplies • For ‘14, approximately 20% of U.S. exports to China • China accounts for 38% of U.S. exports on average • For ‘14, U.S. cotton accounts for 31% of China’s imports • Average market share has been 37%

  29. U.S. Balance Sheet Million Bales

  30. World Balance Sheet Million Bales

  31. China Absorbing Surplus?

  32. Summary Points • Production continues to exceed use • Wildcards: weather and China’s area • Growth in demand not enough to prevent increase in stocks • Exportable supplies chasing smaller Chinese imports

  33. Cotton Prices

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