World cotton stocks seen down in 2016/17, U.S. production up – USDA

World cotton production is expected to rise 4 percent to 105.5 million bales, as yields are yields are expected to recover from the adverse weather and pest problems that affected global output in the preceding year, notably in Pakistan and India, the U.S. Department of Agriculture (USDA) said in its latest monthly report.

Cotton-fieldPartially offsetting these increases is a projected 1.0-million-bale decrease for China, as producers continue to adjust to lower prices and reduced government support, it said, adding that the area devoted to cotton is projected to remain about even with 2015.

World cotton consumption is expected to increase 0.8 percent, reaching 110.5 million bales. The growth rate is based on modestly positive macroeconomic projections, release of cotton from China’s national reserve, and continued strong fiber competition from polyester.

Consumption is expected to continue growing in Vietnam and Bangladesh, but at rates substantially below the 32-percent and 8-percent averages of the previous 3 years.

Vietnam has benefitted from extensive investment from China in recent years and is likely to remain the fastest growing cotton consumer in 2016/17.

Consumption in India, the second-largest spinner, is expected to remain at 24.5 million bales for the third consecutive year.

World trade in 2016/17 is projected at 35.0 million bales, the same level as 2015/16. China’s imports are also projected even with 2015/16, but Pakistan’s imports are likely to fall sharply as domestic production recovers.

Overall world stocks are expected to fall 5 million bales to 99.0 million in 2016/17, but global stocks will remain well above historical levels. The projected decline in China’s stocks more than accounts for the global reduction. As a result, stocks outside of China are projected to increase marginally.

For 2015/16, world production is lowered, mostly due to a smaller crop in India. Consumption is reduced for Pakistan and Morocco. Trade is lowered slightly. The U.S. balance sheet is unchanged, except for a marginal decrease in harvested area. The U.S. season-average farm price is down a half cent to 59 cents/pound.

2015/16 Trade outlook

Major Importers:

  • Morocco is cut 100,000 bales to 75,000 as yarn and fabric imports displace mill use.

Major Exporters:

  • India is down 200,000 bales to 5.5 million on lower exportable supplies.

 

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