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Senior Contributor

"The USDA tries to influence the market"

Hello boys,


I guess everyone has heard a phrase similar to the one I quoted here at the title of the discussion. But sometimes the ones that say that are not very honest. Look at the following article by British website Agrimoney:


China’s cotton imports will recover more than had been expected this season, thanks to the need for high-quality fibre by a domestic spinning industry, US officials said, fuelling long-standing rumours of a volume increase.


The US Department of Agriculture’s Beijing bureau pegged at 1.30m tonnes (5.97m bales) China’s cotton imports in 2017-18, on an August-to-July basis.


That would represent a rise of more than 200,000 tonnes year on year – far bigger than the 58,000-tonne increase, to 1.15m tonnes (5.30m bales), that the USDA has officially pencilled in.


The bureau’s estimate comes amid persistent market talk that China may be poised for accelerating buy-ins, with some rumours of a potential increase to the import quota of 894,000 tonne allowed in with a 1% tariff, under an agreement with the World Trade Organization.


‘Additional import quota’


Indeed, the bureau itself underlined that “since July, anecdotal reports have circulated that the government might be considering special approval to allow for some imports of high-grade cotton.


“Given the Chinese textile sector’s increasing demand for high-grade cotton, traders anticipate the government may increase its flexibility in issuing additional import quota.”


“The Chinese textile sector grew steadily in 2017.


“In consideration of all these factors, it is logical for the government to approve some cotton imports to meet the industry demand in 2018,” the bureau said, although adding that “it remains unclear when the government will allow additional cotton imports”.


‘Strong buyer’


Market commentators reporting talk of Chinese cotton imports within recent days include Ron Lee, at US-based McCleskey Cotton, who reported “rumblings that China will continue to be a strong buyer of US cotton, perhaps even increasing quota after the turn of the new year”.


Latest Chinese cotton import data, for October, the month after the closure of the government’s 2017 auction programme of supplies from the country’s bloated cotton stockpiles, came in at 78,128 tonnes, according to customs data, a rise of 89% year on year.


The purchases took to 983,450 tonnes China’s cotton imports in the first 10 months of this year, a rise of 41%, of which 458,588 tonnes were sourced from the US, a jump of 131% year on year.


‘Shortage of high grade’


While this year’s government auction programme released 3.22m tonnes of cotton to domestic mills, the fibre is said to be of low quality, and the release “will not ease the shortage of high grade cotton for Chinese mills”, the bureau said.


Societe Generale last month noted “market suspicions about the quality of cotton reserves in China, some of which is thought to be five years old”.


Meanwhile, demand for cotton overall is being whetted by economic expansion, and a reduction in Chinese cotton premium to global values, making the country’s mills more competitive.


China’s cotton use in 2017-18 was forecast rising by 335,000 tonnes year on year to 8.50m tonnes (39.0m bales), growth “mainly driven by a more market-oriented domestic cotton price”, the USDA bureau said.


Stocks estimates


The bureau added that a further auction of state stocks scheduled for 2018 could see China’s cotton stocks fall a further 3m tonnes, after a decline of 3.2m tonnes this year, to a figure pegged by “industry sources” at about 5.2m tonnes.


If so, “the state cotton reserve could fall to a more manageable level compared to the 13.9m tonnes in 2014-15”.


China was the world’s top cotton importer, with volumes hitting 24.5m bales in 2009-10, before reforms aimed at reversing stockbuilding promoted by a now-reformed guaranteed pricing scheme.


Imports slumped to 4.41m bales in 2015-16 as the government tightened up on imports, and focused mills on obtaining their supplies from the auctions.



Having read the article, what do you have mind? For me, it seems the USDA gets the blame even when they do a right forecast.

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3 Replies
Veteran Advisor

Re: "The USDA tries to influence the market"


The USDA gets the blame when it's forecasts don't line up with the preferences and biases of the complainer.  Often, it seems to me that someone made marketing decisions that are not congruent with USDAs numbers, and when those marketing decisions are not favorable, USDA is accused of false numbers, even when the numbers turn out to be right.


To me, USDA is one source of information among many and should be considered as a very useful resource, but none of us should rely totally on any one resource.  

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Honored Advisor

Re: "The USDA tries to influence the market"

I'll agree with Jim to a point, but even Jim would surely admit that the Weekly Crop Condition scores

were terribly misleading this year. Also, frankly in my view, the simply perfect September and October

growing conditions bailed out their bogus statistics. They hit a moving target by accident. It happens, it

just won't happen very often as a percentage.

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Honored Advisor

Re: "The USDA tries to influence the market"

Jim is wrong slightly............... We don't get a chance to make a marketing decision before usda sets its position in the market.


Just once I'd like to have a position in the market before the blabber mouths start projecting a winner.  Kind of like the press trying to influence elections by pushing candidates by talking the turnout and exit pole talking points before 9AM central time.


Usda is worse ---- they declare crop size before the candidates decide to run.