A discrepancy remains between projected US cotton exports (12.6 million) and current total commitments (13.2 million).
The USDA's May WASDE report showed a slight change in the world balance sheet for old crop cotton. This is expected as we enter the final quarter of the 2022/23 marketing year.
The biggest month-on-month change was an increase of half a million bales in Central Asian production. With fewer exports, this effectively increased Central Asian closing stocks by 880,000 bales. Due to several expected adjustments (discussed below), the U.S. The ending stocks were tightened by 600,000 bales month-on-month. Australian ending stocks were 200,000 bales lower due to an increase in their exports, while Brazilian ending stocks were 250,000 bales lower due to a decrease in their exports. In the end, sugar production increased by 200,000 bales, but this was offset by a 450,000-bale decrease in their imports.
In summary, we saw a lot of offsetting adjustments in a handful of countries, resulting in a modest net increase of 620,000 bales of worldwide ending stock month-over-month. I consider this adjustment value to be neutral.
Unlike foreign adjustments, the U.S. The old crop cotton balance sheet was changed more significantly than the April estimates. On the production side, 2022 US cotton harvested acreage is set to drop by 130,000 acres, effectively pushing US abandonment to a record 46.9%. The average yield per acre was increased by several pounds. The effect on US 2022 cotton production was a 210,000-bale cut month-to-month. This adjustment was much expected because it represents a reconciliation of the USDA's long-term estimate of 14.68 million bales of 2022 production, with 14.5 million bales graded and counted in 2022.
On the demand side, US exports were increased by 400,000 bales to better match the current level of total export commitments. This adjustment was also expected.
The bottom line of all these adjustments made the U.S. Old crop carry-out tightened to 4.1 to 3.5 million bales. Levels and adjustments have historically been bullish, although the market appeared to be expecting them.
Is there anything left for the 2022/23 balance sheet? The production question must be settled. However, a discrepancy remains between forecasted US exports (12.6 million) and current total commitments (13.2 million). This discrepancy can be resolved either by raising the export forecast, or by reducing total commitments (i.e. through cancellation or rollover into the next marketing year), or both.
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