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Share of US cotton in world trade moving up

US cotton currently has a 36 per cent market share of the world cotton trade, and its increasing. The US took advantage of several competitors backing out of the market. India’s demonetization policy kept cotton out of export channels. Reduced export volumes from Pakistan and Uzbekistan also helped move US cotton. Currently cotton profit potential tops corn and soybeans in the Southeast, the delta and the Southwest.

The good news for US cotton producers is that China is reaching a point where it will have to import significant volumes of cotton to maintain a stable minimum reserve. In 2017 and 2018, the balance between China’s stocks and the rest of the world will be closer, with China holding about 39 million bales and the rest of the world holding about 44 million. As China has sold off some of its reserves, ending stocks are still high but are moving in the right direction, down from 112 million bales to 90 million bales.

With China virtually out of the market, other buyers, including Vietnam and Bangladesh, have taken up the space. A number of factors have emerged and will continue to develop in the near future to push US cotton prices up. US production could reach 20 million bales by 2020.