That assumption would put India exports at 6 million to 6.5 million bales, similar to 2009.  But Adams says 4 million to 5 million may be a more likely export cap.

He said China has depleted its cotton reserves by some 15 million bales in the last 14 to 15 months. “A big question is how much they have left in reserves. We don’t think it can be much. So when do they start rebuilding reserves? Now, they have no flexibility.”

He said China likely will need to import cotton for domestic use and to build reserves. “They have a tight supply situation but will look for opportunities to import.”

He said internationally, cotton is deficit some 17 million bales. “The United States anticipates exports of 15 million bales.”

Exports are off to a good start, he said. “Carryover sales from 2009 and orders not shipped put exports just shy of 6 million bales on the books. That’s the most business on the books at this time of year ever. We’re off to a good start and exports look strong into the fall.”

He said the 2010 U.S. crop is off to a promising start. Early NASS estimates put the crop at 65 percent good to excellent. Some weather problems in late July and early August lowered expectations but still remains at 62 percent good to excellent.

“Abandonment is low, 2.5 percent across the belt. That rivals 2004 and 2007.”

USDA estimates call for an 18.5 million bale crop. “We have the potential to go either way,” Adams said. “With a good rain for much of the Cotton Belt the yield could be exceptional. But challenges remain.”

He said the U.S. and world economy is a concern. “The economic recovery needs to continue,” he said.