Lower global cotton production, higher consumption projected for 2018/19 – ICAC

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The short-term outlook for cotton is positive despite expectations global cotton production will outpace consumption (25.7 million tons vs. 25.4 million tons), as strong textile demand in emerging markets will benefit cotton, the International Cotton Advisory Committee (ICAC) said.

Consumption – which has steadily increased over the last three seasons – is expected to continue rising, with increases of 3.6% and 4.4% projected in 2017/18 and 2018/19, respectively, it said in its latest outlook report.
“Other factors buoying cotton are the rising production costs of synthetic fibres and growing awareness of the environmental damage being caused by micro-fibre pollution,” the report added.

However, the threat of pests and inclement weather remain concerns.This season, the world’s largest producer, India, suffered yield losses due to a pink bollworm infestation and is expected to decrease to 12 million hectares in planted area in 2018/19.

Planting intentions for the world’s largest exporter, the United States, reflect an increase to 4.9 million hectares in 2018/19, but drought conditions will need to be monitored closely, both in the US and in Australia.

In 2018/19, Australian cotton production is forecast to reach 4.7 million bales from a harvested area of 450,000 hectares. This compares to 4 million bales in 2017/18 from a revised harvested area of 470,000 hectares due to poor seasonal conditions, according to a latest report by the U.S. Department of Agriculture.

WORLD COTTON SUPPLY AND DISTRIBUTION
               
  2015/16 2016/17 2017/18   2015/16 2016/17 2017/18
          Changes from previous month
  Million Tons   Million Tons
               
Production 23.09 25.67 25.35   0.00 -0.12 -0.02
Consumption 24.52 25.40 26.52   0.00 0.04 0.05
Imports 8.14 8.54 9.14   0.00 0.16 -0.01
Exports 8.19 8.54 9.14   0.00 0.16 -0.01
Ending Stocks 18.83 19.10 17.93   0.01 -0.15 0.22
               
Cotlook A Index* 83 83* 84**        

* The price projection for 2017/18 is based on the ending stocks-to-mill use ratio in the world-less-China in 2015/16 (estimate), in 2016/17 (estimate) and in 2017/18 (projection), on the ratio of Chinese net imports to world imports in 2016/17 (estimate) and 2017/18 (projection), and on the average price for the first 8 months of 2017/18. The price projection is the mid-point of the 95% confidence interval: 75 cts/lb to 87 cts/lb.
 
**The price projection for 2018/19 is based on the ending stocks-to-mill use ratio in the world-less-China in 2016/17  (estimate), 2017/18 (projection) and 2018/19 (projection); on the ratio of Chinese net imports to world imports in 2017/18 (projection) and 2018/19 (projection); and on the price projection for 2017/18. The price projection is the mid-point of the 95% confidence interval: 67 cts/lb to 106 cts/lb.

 

Uttara is a correspondent with Indoasiancommodities. You can write to her on uttara.malhotra@indoasiancommodities.in.

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