Global cotton stocks to fall to lowest levels in years
Global cotton production is expected to fall in the 2018/19 season for the first time in three years, while China's reserves will be at their lowest levels since 2011/12.
According to forecasts from the International Cotton Advisory Council (ICAC), global production is likely to fall 2% to 26.1m tonnes. The decline would be the first time since 2015/16, and comes after consecutive increases of 7% and 16% in the two prior seasons.
A number of producers are expected to show increases – including China, Brazil, West Africa, Turkey and Uzbekistan – but it likely won't be enough to offset decreases in the United States, India, Australia and Pakistan. The net result is that global cotton area is projected to hold steady at 33m hectares.
Consumption, which managed to post a 9% increase to 26.8m tonnes in 2017/18, is forecast to drop slightly to 26.7m tonnes in the coming year. The tariffs imposed in the much-publicised trade war between the US and China are not expected to influence consumption directly, although they could affect textile demand if they have a slowing effect on economic growth, the inter-governmental group says.
With consumption projected to exceed production in 2018/19, the drawdown of stocks continues.
Globally, stocks are expected to decrease from 18.8m tonnes to 18.2m tonnes, due almost exclusively to big decreases in China's warehouses.
The world outside of China will actually see a minor gain in stocks, but not enough to offset the declines in China – where the projected total of 7.6m tonnes would represent the country's lowest levels since 2011/12.
The Cotlook A Index price projection for 2018/19 is seen at 88 cents – one cent higher than 2017/18's 88-cent average.
Last month the US Department of Agriculture (USDA) forecast that world cotton trade would reach a 6-year high in 2018/19.