Cotton planting is due to begin in a few months time

Cotton planting is due to begin in a few months' time

As cotton planting gears up to get underway for the 2014/15 season, first forecasts suggest that while the gap between cotton production and consumption is likely to narrow, stocks are still growing.

In the northern hemisphere, which accounts for about 90% of world cotton production, planting is set to start in a few months' time.

According to the International Cotton Advisory Committee (ICAC), world area is likely to decline, mostly due to an expected decline in China.

In 2013/14, the inter-governmental group estimates that China's cotton area is 4.6m hectares, a drop of 8% from 2012/13. It also sees a further decline to 3.9m hectares for 2014/15.

However, this may change as planting does not start until March, and on 26 December, the official Xinhua news agency indicated that trial subsidies for cotton and soybeans may be part of China's reforms for agriculture to be implemented next year.

Global cotton mill use is expected to continue growing in 2014/15, on the basis of continued recovery in global economic growth.

However, a small gain in cotton prices could constrain the increase in demand for cotton, particularly if the price of polyester remains low.

While the divergence between cotton production and consumption is expected to narrow in 2014/15, there is still a significant global supply of cotton and stocks are growing.

World stocks at the end of the current season are forecast to be 20m tons, 56% of which will be in China. As of 27 December, China's reserve held 11.8m tons of cotton.

World trade is expected to decline in 2014/15 by 9% to 7.7m tons, due in large part to the continuing decline of China's imports.

Although China's production is expected to be lower in 2014/15, its consumption is also declining and its government currently holds enough stock for one-and-a-half years without any further imports or production, the ICAC says.