World Price and Stocks-to-Use Ratio

This graph shows monthly world stocks-to-use estimates (in percent) matched against the A-index of world cotton prices (in cents per lb). As usual, stocks-to-use moves in the opposite direction from world prices. An apparent key threshold is 40% world stocks-to-use (dark horizontal line) which is the point where major trends in world prices (either up or down trends) tend to change direction.   The massive build-up in world stocks, with over half of it represented by an out-of-circulation Chinese reserve, distorted the historical relationship between world price and world stocks-to-use.  Then the subsequent whittling down of world ending stocks in recent years reflects the slow return to more balance supply and demand.  More recently, the pandemic recession has caused a downshift,  and then a recovery, in demand.  This pattern is reflected by a riseand fall in projected world ending stocks.

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