USA : Carryover stocks support cotton trade

The fiscal 2008 cotton export forecast is raised to a record $5.8 billion, but volume remains unchanged at 3.6 million tons. An increasing share of higher grade cotton exports, coupled with shipments later in the season, raise export unit value.
This outlook is supported by the largest U.S. carryover stocks since 1967/68, record exportable surplus and strong foreign demand, especially from China, while global production growth remains limited. World stocks are forecast to decline, while trade should increase, driven primarily by China’s import demand.
Canada and Mexico will continue to be the top two destination markets for U.S. agricultural exports in 2008. Exports to both are forecast to continue the impressive growth shown over the past 15 years. Fiscal 2008 exports are forecast to reach a combined $28.4 billion--up $1.5 billion from the previous forecast and up almost $3 billion from 2007. Exports to Canada are projected to reach a record $14.7 billion, up from $13.2 billion in 2007.
Shipments are overwhelmingly dominated by high-value products such as fresh horticultural products, processed food, and beverages. Exports of these products are expected to benefit from a strong Canadian economy, and the continued strength of the Canadian dollar against the U.S. dollar.
Exports to Mexico are forecast to reach $13.7 billion in 2008, up from $12 billion in 2007. U.S. gains are expected across a wide variety of products, benefiting from higher export unit values, stronger import demand for cotton, and continued rapid growth of Mexico’s middle class which is boosting import demand for a wide range of high-value products.
Cotton continue to be the largest U.S. agricultural exports to China, accounting for 63 percent of total sales, and both are poised to expand further in 2008. With China’s cotton imports from all suppliers forecast to increase almost 50 percent from the previous year, and the U.S. being China’s leading cotton supplier, U.S. exports are set to increase in 2008.