By the conclusion of the 2018/19 season, world cotton stocks are projected to drop to 17.6 million tonnes, reflecting a decrease of 5 per cent from the previous year and registering the fourth straight year of decline, the International Cotton Advisory Committee (ICAC) said in its latest report.
Consumption is expected to remain steady but a 3 per cent decline in global production will draw down the world’s warehouses, the report said.
Global cotton trade is likely to decline by 11 per cent to 7.9 million tonnes in the ongoing 2014-15 season due to sluggish demand from the world’s largest importer China, according to ICAC.
Production in China is estimated to increase by 1 per cent to 5.94 million tonnes, and when combined with a 7 per cent decline in India’s production due to insufficient rainfall, the changes mean China will regain the ‘top producer’ title it lost to India in the 2015/16 season.
“To promote consumption of domestically grown cotton, the Chinese government is limiting the volume of cotton imports, which (it) forecast down by 36 per cent to 2 million tonnes in 2014-15,” the US-based ICAC said in a statement.
However, imports elsewhere are expected to grow by eight per cent to 5.9 million tonnes due to gains in South and Southeast Asia where many consuming countries produce small quantities of cotton, it said.
Although cotton prices have come under pressure, current projections for global consumption are unchanged at 26.8 million tonnes, with production projected to be slightly lower at 25.9 million tonnes.
The consumption in India, the world’s largest cotton grower, is expected to be 5.3 million tonnes. Consumption in Pakistan may grow by two per cent to 2.3 million tonnes but will depend on sufficient and stable electricity supply in the regions with highest concentration of spinning mills, ICAC said. Bangladesh consumption is projected at 9,54,000 tonnes while Vietnam is expected to consume nearly 7,00,000 tonnes of cotton, up nine per cent from 2013-14, it added.
Cotton prices are feeling the effects of uncertainty related to the global economic environment, as opposed to the impact of trade barriers. Price fundamentals still look solid, as reflected in the price forecast, the report said.