US’ cotton product imports in 2022 drop post last year’s high: USDA

US cotton product imports in the calendar year 2022 were down after reaching the highest level in a decade (measured in square meters equivalent). Cotton product imports in 2022 were a record $57.0 billion, nearly $8.0 billion higher than the previous year as per the International Trade Administration’s Office of Textile and Apparels (OTEXA). Despite lower import volumes, a higher value was attributed to greater unit values and US consumers’ sustained demand for goods.
Robust levels of consumer discretionary income, low unemployment, and higher wage growth have all supported strong purchases despite consumer inflation, according to a report titled ‘Cotton: World Markets and Trade’ by the United States Department of Agriculture (USDA).

China remained the largest cotton product supplier for the 20th consecutive year. This was despite Section 301 tariffs implemented in 2019 amid the US-China trade dispute and the Uyghur Forced Labor Prevention Act (UFLPA) that went into effect on June 21, 2022 (a Customs and Border Protection Withhold Release Order was in place before the UFLPA).

Cotton’s market share of total apparel imports (including all fibers) fell from the previous year to roughly 40 percent. Man-made fibers (MMF) including polyester, nylon, spandex, and acrylic tied its record for market share among all US apparel imports at nearly 60 percent. China is the largest manufacturer of man-made synthetic yarns (which are ultimately used to manufacture MMF apparel), accounting for roughly 60 percent of world production. For the past decade, competitively priced MMF products have been a major factor slowing global growth in cotton consumption.

Global production is up from the previous month to 115.1 million bales and attributed to higher production in China, Australia, and Uzbekistan more than offsetting India’s lower crop. Consumption is forecast down more than 500,000 bales from the previous month due to lower consumption in Pakistan, Turkey, Bangladesh, and Indonesia due to an array of country-specific factors, the report added.

Pakistan’s macroeconomics woes persist and both Pakistan and Bangladesh are experiencing issues opening and executing letters of credit along with declining profit margins amidst higher electricity costs. Turkey’s earthquake adversely affected mills in the area and Indonesia’s imports are forecast at the lowest level since 1990.

Global trade is forecast down roughly 800,000 bales from the previous month to 39.6 million bales, the lowest level in six years. This month’s adjustments are mostly attributed to lower global consumption. Global ending stocks are forecast up more than 2.0 million bales to 91.1 million and mostly attributed to changes in China.

China’s beginning and ending stocks were revised higher because of a downward revision to consumption in 2021-22 and higher 2022-23 production. The US balance sheet is unchanged from last month, and the projected US season-average farm price is also unchanged at 83 cents per pound.

Global cotton prices were mostly unchanged since last month’s WASDE with prices on the Intercontinental Exchange (ICE) settling at roughly 85 cents per pound. Relatively stronger US export sales were offset by a stronger US Dollar index and expectations for higher-than-expected interest rate hikes by the US Federal Reserve. The Dow Jones Industrial Average and S&P Retail Index were also down from the previous month and further capped a rise in cotton futures prices.

Both China and Pakistan spot prices were down on weaker exchange rates relative to the US dollar. Lower Brazil prices reflected slower-than-expected demand as witnessed by lower exports. India prices were up on stronger domestic demand amid higher operating rates by India’s spinning mills.

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