The latest U.S. Department of Agriculture (USDA) cotton projections for 2012/13 indicate that foreign ending stocks are expected to reach a record 73.5 million bales, 11 percent above 2011/12.
Stocks have risen considerably over the last 2 years as a result of recent record cotton prices that encouraged increased production but reduced demand. In addition, China's policies that support domestic prices above world prices have led to significant stock-building.
While foreign cotton ending stocks are expected to rise for the third consecutive season, the stock growth has been extraordinary in China. In 2010/11, China's stocks reached a 15-year low of 10.6 million bales and significant rebuilding of the national reserve began.
By the end of 2012/13, China's stocks are projected to total nearly 37 million bales, or the equivalent of 12 months of mill use there; China alone will hold half of the foreign cotton stocks, but their availability to the market remain uncertain.
