Recently, global cotton prices declined for a second consecutive month. Values for the nearby May NY Futures contract set a series of life-of-contract lows over the past month, with prices dropping from nearly 59 cents/lb a month ago to those near 56 cents/lb. In latest trading, values have rebounded above the 58 cent mark but current levels are among the lowest since 2009. The A Index also lost about three cents/lb. Recent values have been between 64 and 65 cents/lb.

However, since September, every monthly update to USDA’s supply and demand figures has featured decreases to both world production and consumption. This month’s report was no exception, with the global harvest number dropping 1.2 million bales (from 101.4 to 100.2 million) and the global mill-use projection falling 400,000 bales (from 109.6 to 109.2 million). Current estimates for both production and mill-use are the lowest since 2003/04.

No price-related details, however regarding an upcoming set of auctions have been officially released. If the expectations for the drop in Chinese prices expressed by CNCE and ZCE markets are confirmed by an upcoming government announcement, there is potential for Chinese spinning mills to become more competitive internationally and for Chinese mill-use to increase. The USDA is expecting China will start to more aggressively move cotton from reserves by lowering prices, and that Chinese mill-use will increase by one million bales in the coming crop year (from 32.0 to 33.0 million bales).