Global cotton stocks are set to reach their highest level in five years as consumption and trade suffer during the coronavirus pandemic – with prices for the year-end sitting near a 12-year low.
Since the beginning of 2020, cotton futures prices have declined 30%, as retail stores around the globe have shuttered and orders from textile mills have dropped.
The latest projections from the International Cotton Advisory Council (ICAC) now put prices for the year-end 2019/20 average of the A Index at 72.8 cents per pound. The price projection for the year-end 2020/21 average of the A Index is 58.8 cents per pound – up slightly from last month’s forecast for 56.9 cents per pound.
Even so, this would be the lowest level since the global financial crisis of 2007-8, when prices fell to 49 cents per pound.
“It appears that the expected impacts of the Covid-19 pandemic on this season are, unfortunately, developing the way everyone feared they would,” the inter-governmental group says in its ‘Cotton This Month’ update for June.
Consumption is expected to be 23m tonnes in 2019/20, down 11.3% from the prior year. While global trade is seen declining 9.6% to 8.34m tonnes.
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By GlobalDataWith production expected to increase by 2% to 26.2m tonnes, stocks could swell to 21.75m tonnes – the highest they’ve been in five years.
China, the world’s leading country for mill-use, is expected to fall 12% to 7.25m tonnes. India is projected to suffer its own 12% slide to 4.75m tonnes. Others feeling the pain include Pakistan (-7%), Turkey (-8%), Vietnam (-8%), Brazil (-11%) and Bangladesh (-25%).
Global trade is expected to fall to 8.34m tonnes in 2019/20, a 9.6% decrease from the previous season. Recovery for the coming 2020/21 season is expected to be modest under the current IMF projections for economic recovery.
“Consumption and trade have decreased in the wake of the containment measures to control the Covid-19 pandemic and all major consuming countries have been impacted by the retail losses that have led to decreased orders as well as the closure of mills to reduce the spread of Covid-19,” the ICAC notes.
Last month, the ICAC was among five associations representing the cotton and textile industry calling for fair and equitable trade practices across global supply chains amid the Covid-19 pandemic.
