Cotton production to recover but stocks falling
Consumption is expected to remain stable
World cotton production is expected to recover during the current year as cotton planting gets underway in northern hemisphere countries from this month, although stable consumption will not be enough to stem a 5% fall in ending stocks to 19.4m tons.
The latest update from the International Cotton Advisory Committee (ICAC) notes that consumption in 2016/17 is expected to remain stable at 23.9m tons, after declining by 2% in 2015/16. This is primarily due to a 5% drop in consumption in China to 6.8m tons as a result of increasing wages, high domestic cotton prices, and low polyester prices. Polyester has been favoured over cotton in recent seasons in China, which produces 72% of global supplies of the manmade fibre.
In contrast, Vietnam's cotton consumption is forecast to rise 16% to 1.3m tons, making it the fifth largest consumer; while consumption in Bangladesh, the sixth largest consumer, could increase by 10% to 1.2m tons. Meanwhile, India's consumption is projected to rise by 4% to 5.5m tons, and in Pakistan by 1% to 2.2m tons.
In other trends forecast by the inter-governmental group, cotton production in Pakistan is expected to jump 35% to 2.1m tons as yields recover, and following a plummet in production in 2015/16.
Additionally, increases in cotton area in India and the US, of 4% and 2% respectively, are expected to offset losses in China, which are expected to contract by 10% after the Chinese government last month announced a reduced target price for Xinjiang of CNY18600 per ton. World cotton production is therefore projected to increase by 4%, to just under 23m tons.
Global imports for the current fiscal year are likely to drop by 3% to 7.4m tons with imports by Vietnam, Bangladesh and China all projected at 1.1m tons each, representing 44% of world imports.
After declining by 3% in 2015/16, world cotton trade is expected to recover by 1% to 7.5m tons in 2016/17, as consumption grows in import dependent countries. Vietnam and Bangladesh are likely to be the two largest importers of cotton in 2016/17, with volumes expected to rise by 25% and 5%, respectively. China, however, could see imports fall by 13% to 936,000 tons.
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