US farm officials lifted their forecast for domestic cotton prices as they said that the country would prove, relatively, unscathed by the slump in Chinese imports this season, with India to "bear the brunt" of the decline.
The US Department of Agriculture ditched its most pessimistic forecasts for US farmgate cotton prices this season, revising its estimate to 59-64 cents a pound from a previous figure of 56-64 cents a pound.
The USDA said that the revision, while still implying a large drop from the average price of 77.9 cent a pound in 2013-14, was "based on stronger-than-expected early season prices".
However, it also came as the USDA lower by 500,000 bales to 4.6m bales its forecast for domestic cotton stocks at the close of this season, reflecting a cut of 26 pounds per acre to 773 pounds per acre in the yield forecast.
"Production is reduced 474,000 bales, due mainly to a lower crop estimate for Texas," the department said.
It also flagged the relative resilience of the US, Brazilian and Uzbekistani cotton exports to the halving, to 7.0m bales, in China's imports this year.
India will suffer most, with its price competitiveness eroded by a programme guaranteeing cotton farmers a minimum value for their crop.
"In addition, import demand from China is likely to focus on machine-picked cotton not available from domestic supplies," the USDA said.
"As a result, India will struggle to maintain its share in the shrinking Chinese market and stocks will rise sharply."
Indeed, the USDA raised by 300,000 bales to 1.1m bales its forecast for India's imports, as the country's "support programme raises domestic prices".
By contrasts, Brazil, the US and Uzbekistan have been "much less dependent on the Chinese market" for shipments "and will see proportionately smaller decreases in their 2014-15 exports.
"In fact, for Brazil, which had the least reliance on China, total exports are forecast to rise on larger supply and shipments to other destinations."
Cotton futures for March stood up 0.4% at 60.09 cents a pound in late deals in New York.