While the global cotton industry continues to face a number of challenges – including trade uncertainties, slowing economic growth and weakening demand – consumption of the raw materials is still expected to set an all-time high in 2019/20, reaching 27.3m tonnes.
That said, according to forecasts from the International Cotton Advisory Council (ICAC), this record-breaking number still won’t be enough to keep global ending stocks from rising by the end of the 2019/20 season. Indeed, total production is projected to reach 27.6m tonnes, a number boosted in part by a 6% increase in global yields, which should leave 17.7m tonnes in the world’s warehouses at the end of next season.
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Meanwhile, according to the inter-governmental group, changes in market fundamentals – particularly the stocks-to-mill-use (SMU) ratio outside of China – will drive a decrease in the Cotlook A Index price projection, which is now expected to drop to 81.25 cents per pound in 2019/20.
The forecast mirrors a separate outlook that suggests a “lost decade” for cotton consumption could be nearing an end.
