In their May report, the USDA has released its first complete set of estimates for an upcoming crop year. The projection for world production in 2015-16 is 111.3 million bales, which represents an 8.0 million bale decrease (-6.7 per cent) relative to the 119.3 million bales harvested in 2014-15. The forecast for world mill-use in 2015-16 is 115.3 million bales, which represents a 3.8 million bale increase (+3.4 per cent) relative to the 111.5 million bales consumed in 2014-15.
In combination, the smaller crop and the increase in use are expected to result in the first production deficit in six crop years. This implies a decrease in ending stocks, and the estimated decline in warehoused supplies is 4.0 million bales. However, global ending stocks have set a series of successive records over the last four crop years, and there should be little concern of shortage. The 106.3 million bales expected to be sitting in the world´s warehouses at the end of the 2015-16 crop year are more than 70 per cent higher than the average between 2004-05 and 2008-09 (62.1 million bales). Due to what was considered a massive volume of supply during the 2004/05-2008/09 time period, the A Index averaged only 60 cents/lb over those five years.
At the country-level, India is expected to emerge as the world´s largest producer in 2015-16. Previous forecasts for 2014-15 suggested that India would surpass China in the current crop year. However, the slow pace of arrivals led to a series of downward revisions to the Indian harvest figure and pulled recent estimates for Indian production in 2014-15 to a level equal to that for China (30.0 million bales). Reform to government support measures for cotton growers in China is expected to pull Chinese production down by 3.0 million bales in 2015-16. Meanwhile, lower cotton prices are anticipated to result in a decrease of only 500,000 bales in India.