The US government on Friday raised its forecast for global cotton inventory in the upcoming season on weaker-than-expected demand from China, pushing prices lower and reinforcing concerns about fibre's battle for market share with polyester. In its monthly crop report, the US Department of Agriculture cut its consumption forecast for China for the current season and the upcoming year which starts in August due to "continued strong competition" from manmade fibre and imported cotton products.
The new estimate for 2015/16 is 34.5 million bales, up 500,000 bales from 2014/15, but down 4 percent from last month. That pushed the ending stocks forecast up to 108 million bales, up 2 million from last month, but down from 110 million in the current season. Sharon Johnson, a senior cotton specialist at Wedbush Securities in Atlanta, said the global outlook was "negative if not bearish."
At 1:33 pm (1733 GMT) the December contract, which represents the 2015/16 harvest, was down 0.44 percent at 65.57 cents per lb, on track for its biggest weekly loss in nearly two months. Ahead of the report, prices had been up over 2 percent at 67.23 cents. Fiber has struggled to capture market share back from lower-priced polyester even after the plunge in prices in the past year. The rout in crude oil, a raw material in manmade fibers, has also pushed polyester down. The global outlook offset a relatively upbeat report on the domestic market, with a cut in the inventory estimate and a much-anticipated increase in exports in 2015/16.
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