The global production estimate has been lowered to 24.7m tonnes for 2020/21

The global production estimate has been lowered to 24.7m tonnes for 2020/21

A projected reduction in global cotton production in the 2020/21 season is expected to ease pressure on prices due to lower year-ending stocks.

According to the latest update from the International Cotton Advisory Committee (ICAC), global production is anticipated to decline from 24.9m tonnes to 24.7m in 2020/21, with ending stocks for the period expected to fall to 21.7m tonnes.

While the recovery of consumption has been slow and is expected to remain steady at 24.3m tonnes next season, global trade is expected to do more than improve and is likely to exceed pre-Covid levels, reaching about 9.4m tonnes.

The USA and China are still engaged in a trade war, although the Phase One trade deal is mitigating tensions somewhat, the ICAC notes.

Under the current terms of the agreement, China would purchase record levels of US agricultural products. From the April to September period, China has imported 65% more cotton from the United States over the preceding period. With Phase One of the trade agreement going into effect on 20 February, the increase in imports was anticipated to be seen in April given the time to react and shipments to be received by China customs.

The Secretariat's current price projection for the year-end 2020/21 average of the A Index is 69.4 cents per pound for December.