Rising stocks and uncertain demand are clouding the outlook for the global cotton market in the year ahead, although stocks outside of China are still seen reaching an all-time high.

In its latest monthly update as the 2018/19 season draws to a close, the International Cotton Advisory Council (ICAC) says global cotton consumption looks set to outpace production by 1m tonnes in the period. Its numbers suggest production will be 25.7m tonnes, with consumption estimated at 26.7m tonnes.

Major producers including the US, Pakistan, and Australia suffered production losses due to poor weather conditions and lack of available water, but Turkey and Brazil both posted positive totals in 2018/19, with Brazil setting a record-high production of 2.7m tonnes.

Meanwhile, ending stocks for the 2018/19 season are projected at 17.8m, with the figure expected to expand to 18.7m tonnes by the end of next season – with stocks outside of China reaching an all-time high of 10.5m tonnes. If consumption increases in 2019/20, it likely will come from the emerging economies in Asia and Southeast Asia.

Last month the inter-governmental body expressed hope that American and Chinese representatives might be able to de-escalate the US-China trade war later this month when they’re together at the G20 Summit in Osaka, Japan. This seems to have been the case, with US President at the weekend tweeting negotiations between the two countries are “back on track” and new China tariffs are now on hold. 

In its last monthly update the ICAC also warned trade tensions have also had an impact on prices, with the Cotlook A Index hitting a season-low of 76 cents per pound in mid-May.

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