Decreases in the crop size of some top cotton-producing countries such as India, Argentina and South Africa, have resulted in cotton consumption overtaking and exceeding production as the 2021/22 season comes to a close, says the ICAC.

Although closely aligned throughout most of the year, given smaller-than-expected crops, consumption is expected to exceed production by about 265,000 tonnes, the ICAC update reports. 

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As the 2021/22 season comes to a close, the report estimates: 

  • Global area for the 2022/23 season is estimated to decrease by 1% to 32.78m hectares
  • Global cotton production for the 2022/23 season is projected to be 26.13m tonnes 
  • Global cotton consumption for the period is currently projected at 26.09m tonnes   
  • Prices will be influenced by multiple, hard-to-predict events including governmental policies 

To assess the impact of those figures on prices, the stocks-to-use ratio — which measures the available cotton stocks as a share of cotton mill use — can help quantify the relationship between cotton supply and demand. When supply is tight compared to demand, the ratio is lower. A lower stocks-to-use ratio could indicate higher prices. In contrast, when supply exceeds demand then the ratio increases putting downward pressure on cotton prices. Planted area also can have a major impact on prices.  

Given so many variables and unknowns, the secretariat is suspending publication of the price projections and will re-evaluate the price situation in August.  

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High volatility and extenuating circumstances in global markets make it difficult for any modelling framework to produce accurate and useful information, the ICAC says, adding: “Please note that this is only a temporary pause and as soon as we are confident in the model data we will release projections.”

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From a historical perspective, the only other time the price model was suspended was during the 2010/11 season of unprecedented high price and volatility.

Last month, the industry posted gains in most major categories versus the previous season.