EDITOR’S NOTE — The following information was compiled by James Johnson, James Kiawu, Stephen MacDonald, Leslie Meyer and Carol Skelly of the United States Department of Agriculture and presented at the agency’s Outlook Conference.

The U.S. Department of Agriculture’s (USDA’s) first world 2013/14 cotton projections anticipate that, despite lower production and higher consumption, world stocks will rise for the fourth consecutive season.

Global cotton production fell and consumption recovered during the current season, 2012/13, but China added more than 12 million bales to ending stocks as a result of setting domestic price support well above world market-clearing levels.

China’s policies have driven world cotton market developments in 2012/13 and will continue to do so for the foreseeable future.

Since China’s leadership has not indicated that changes are being considered, USDA is basing this preliminary outlook on a continuation of the policies affecting support prices, import levels, and release of the state reserve as of mid-February 2013.

Changes to these policies would likely change the outlook; in particular, a decision to lower support prices and/or release more reserve stocks would pressure world prices.

The U.S. crop is projected to fall sharply to about 14.0 million bales in 2013/14, accounting for most of the expected decline in world production, as producers shift area to corn and soybeans following the historic mid-western drought of summer 2012. Accordingly, U.S. cotton stocks, which are estimated to rise in 2012/13, are expected to tighten again in 2013/14.

Global 2012/13 cotton production is estimated to decline 4 percent from the previous year to 119 million bales. The estimated crop decline is the result of reductions in the major southern hemisphere producing countries and India, partially offset by increases for the United States, the African Franc Zone countries, and China.

World 2012/13 area harvested is estimated at 34.1 million hectares, down 4 percent from the preceding year, while the world average yield is about unchanged at 759 kg/hectare.

China is the world’s largest cotton-producer, with an estimated 2012/13 crop of 34 million bales, up 3 percent from the preceding year. China’s official cotton procurement policy offered a domestic support price equivalent to 20,400 RMB/ton of lint ($1.47/lb.) for the 2012 crop, 5 percent above the preceding year.

However, planted area in the Yellow and Yangtze River provinces fell sharply, due mainly to labor shortages and the availability of more attractive cropping alternatives. The decline in production in the east was more than offset by increased production in the northwest Xinjiang Autonomous Region, which has more widespread mechanization, higher cotton yields, and fewer profitable alternatives.

China’s 2012/13 harvested area is estimated at about 5.3 million hectares, 2.3 percent below 2011/12, while yields are expected to rise 5 percent to 1,403 kilograms per hectare, due both to the regional redistribution of area and to favorable weather in Xinjiang.