A “lost decade” for cotton consumption could be nearing an end, with new figures forecasting that an increase in production in the next crop year could lift consumption to a new record.
According to the latest ‘Cotton Market Fundamentals & Price Outlook’ from Cotton Incorporated – a non-profit organisation funded by US cotton growers – the US Department of Agriculture (USDA) expects a healthy increase in production of 8m bales to 126.5m in 2019/20, compared to 123.8m in 2017/18.
Mill-use is also projected to increase at a rate near the long-term average in the next crop year, rising by 1.9m bales to 125.5m against 122.6m a year earlier.
The report adds global consumption growth has been strong over the past several years and if realised, the increase next crop year would result in a new record.
“This would end what has been a lost decade for cotton consumption, with it having taken more than ten years since effects stemming from the global financial crisis in 2008/09 and price spike in 2010/11 have allowed world cotton demand to surpass the record set in 2006/07.”
Of the global increase in production during 2019/20, the majority will come from the US and is expected to result from a rise in harvested acres, followed by India, Pakistan and China.
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By GlobalDataHowever, the report warns this could be subject to change based on current macroeconomic conditons, including the trade environment and more specifically the trade spat between the US and China.
“Since the second half of the 2018 calendar year, the outlook for global economic conditions has turned increasingly pessimistic. The extent to which this trend continues can be expected to influence demand.”
