India’s forecast for 2017/18 ending cotton stocks have been lowered substantially in the December WASDE, from 13.2 million bales to 11.7 million. This change partly reflects a 5,00,000-bale cut in production, only partly offset by a 3,00,000-bale cut in exports, but is mainly driven by a revision to 2017/18 beginning stocks and consumption. India’s official estimates of cotton consumption were recently revised back to the 2015/16 marketing year, showing higher use than USDA’s data. These revisions were concentrated on “non-mill use,” indicating consumption outside the usual commercial and industrial channels.
Market analyst note for some time stocks were tighter in India than USDA reports indicated but uncertainty remained about which component of the balance sheet might be incorrect. The revised consumption data from India’s Cotton Advisory Board lowers stocks nearer trade-consensus levels via higher consumption.
From 2015/16 to 2017/18, the most recently revised data suggest an aggregate of about 1.2 million bales more consumption over the 3 years than indicated in the November WASDE. This has a significant impact on India’s stocks-to-use, with 2017/18 stocks-to-use falling from 45 per cent in the November WASDE to about 40 per cent this month. These changes are significantly large to impact international balance sheets, with revisions to India accounting for half of lower 2017/18 ending stocks. Most of the remainder is due to Pakistan, owing to its greatly reduced crop, or higher exports from Australia, Brazil and the US.
