World cotton supply and demand estimates for 2016-17 include a modest net increase in world production, concentrated in China, Brazil and several other countries and partially offset by a reduction in Australia. However, the real wild card is US exports for the new crop market. The old crop market has been driven by a boom in US exports. This is reflected by a seven-month uptrend in both price and export sales, representing an expansion of the demand relationship. Most of this expansion can be attributed to the particularly good, and widespread, quality of the 2016 US crop.

To the extent greater export demand for US cotton depends on the US actually having the biggest supply of quality cotton in a given year, it remains to be seen whether the US will retain this larger market share. We don’t know what the quality of the 2017 crop will be.

On consumption side, domestic mill use can be expected to be around 3.5 million. However, market share may be influenced by more longer-lasting things, like the reputation of the sourcing country, and the expanded relationships between suppliers and buyers. Perhaps then there will be positive spillover into the new crop marketing year that is somewhat independent of the specific quality of 2017 US cotton supplies.