USDA has forecasted a 2 per cent decline in US cotton exports to 11.5 million bales for the MY 2024-25, marking the lowest level in nine years. As of now, the US has shipped about 1.5 million bales, only 13 per cent of the USDA’s export target, the slowest pace since the 2017/18 season.
This decline is attributed to a combination of factors, including reduced production due to adverse weather conditions in key growing regions and increased competition from other cotton-producing countries like Brazil and Australia.
In early 2024, US cotton prices surged to contract highs, making American cotton less competitive, particularly in markets like China. Brazilian cotton, which is cheaper, has become a strong alternative for Chinese buyers, further diminishing US export prospects. As a result, China has turned to other countries for cotton, impacting US shipments.
US exporters are now focusing on markets like Pakistan and Vietnam, where exports have risen significantly by 77 per cent and 60 per cent, respectively, in MY 2024-25. However, despite these gains, they have not been sufficient to offset the loss in exports to China. Much of the decline in US cotton exports can be attributed to global supply shifts, rather than broader economic concerns or reduced Chinese demand alone.
China’s cotton imports have surged in 2024, reaching 2.28 million bales by Sep’24, more than double the volume imported in the same period in 2023. Brazilian cotton has played a major role in this increase, as the country’s higher production and lower prices allowed it to overtake the US as China’s top supplier in 2023-24. As a result, US cotton exports have been further limited, despite a recovery in domestic production.
Meanwhile, Australian cotton exports, which were previously hampered by diplomatic tensions with China, are recovering. Although China’s demand for Australian cotton remains lower than before, shipments to countries like Vietnam, Indonesia, and Bangladesh continue to support strong exports from Australia.
Overall, the global cotton market is seeing shifts in supply dynamics, with Brazil’s growing competitiveness and China’s diversified sourcing strategies reshaping trade patterns.
