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Mexican cotton reaches record volumes

Mexico’s cotton production is at a 30 year high. But this increased production has lowered demand for US cotton. So far the US has accounted for nearly all of Mexico’s cotton imports. Because of stipulations outlined in trade agreements requiring the use of US cotton, Mexico’s imports have not yet fallen as much as production has climbed.

If Mexico’s production were to remain high for an extended period, it could make further inroads into domestic mill use as the downstream demand becomes more accustomed to the greater supply of local cotton. A successful outcome resolving US-China trade tensions could also reduce Mexico’s export opportunities, increasing pressure to use cotton domestically. Neither of these outcomes bode well for US cotton exports to Mexico.

As for other countries, Turkey’s cotton imports are projected down. Weaker exports could force India to reduce its imports by the same amount. Vietnam’s declining mill use could represent a decrease in cotton imports. When it comes to cotton exports, Australia, whose exports are forecast to increase by 2,00,000 bales, has been buoyed by China’s growing demand. Turkey’s exports could also grow by 1,00,000 bales due to declining domestic mill use while India’s exports are expected down 3,00,000 bales and Burkina Faso’s down 1,50,000 bales due to smaller crop sizes.