The latest U.S. Department of Agriculture (USDA) cotton projections for 2012/13 indicate that foreign ending stocks are expected to reach a record 73.5 million bales, 11 percent above 2011/12.

Stocks have risen considerably over the last 2 years as a result of recent record cotton prices that encouraged increased production but reduced demand.

In addition, China’s policies that support domestic prices above world prices have led to significant stock-building.

While foreign cotton ending stocks are expected to rise for the third consecutive season, the stock growth has been extraordinary in China.

In 2010/11, China’s stocks reached a 15-year low of 10.6 million bales and significant rebuilding of the national reserve began. By the end of 2012/13, China’s stocks are projected to total nearly 37 million bales, or the equivalent of 12 months of mill use there.

China alone will hold half of the foreign cotton stocks, but their availability to the market remain uncertain.

According to USDA’s October Crop Production report, the 2012 U.S. cotton crop is estimated at 17.3 million bales, up marginally from last month’s forecast but 1.7 million bales (11 percent) above the 2011 production.

With harvested area unchanged in October and the national average yield slightly higher, the U.S. cotton crop estimate increased 178,000 bales this month.

The U.S. upland cotton crop is estimated at 16.6 million bales, above both last season and the 5-year average.

During the previous 20 years, the October forecast has been below final cotton production 12 times and above 8 times. Past differences between the October forecast and the final production estimate indicate that chances are two out of three that the 2012 U.S. upland crop will range between 15.8 and 17.5 million bales.

Upland production this season is forecast to rise for two of the Cotton Belt regions this season.

In the Southwest, the 2012 upland cotton crop is projected at 6.3 million bales, considerably higher than last season’s drought-reduced crop but near the 10-year average. Planted area abandoned is estimated at 26 percent, near the 5-year average, while the Southwest yield is forecast at 591 pounds per harvested acre, nearly 100 pounds below the average.