News
The Fundamentals Are Fine but Shipping Issues Continue to Plague Cotton
For Immediate Release
Date Posted: 1 March 2022
Executive Summary
Highlights from the March 2022 Cotton This Month include:
- Global production for the 2021/22 season is currently projected to be 26.11 million tonnes
- The consumption forecast for the 2021/22 season is holding steady at 25.67 million tonnes
- While those fundamentals look solid, the challenge is getting fibre from farms to spinning mills, forcing some countries to change their supply chains
- The Secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 101 cents to 120 cents, with a midpoint at 109 cents per pound
The Fundamentals Are Fine but Shipping Issues Continue to Plague Cotton
What cotton farmers are producing and what textile professionals are spinning appear to be aligned fairly well, with production in the 2021/22 season is currently projected to be 26.11 million tonnes and consumption holding steady at 25.67 million tonnes. The fundamentals are fine.
The problem that today's cotton industry faces is getting the fibre to the spinners. Cotton has a lot of company in its struggle, as the Covid pandemic disrupted global shipping across many industries. But the cotton supply chain is longer and more complex than it is for most other commodities, especially since so much of the production in the West has to be shipped halfway around the world to the countries where it's transformed into textiles.
Those challenges are forcing countries to adapt by streamlining their supply chains. China, Vietnam and Pakistan imported large amounts of cotton from the United States in 2020/21. The graph below shows how the import profile has shifted away from the United States with large increases in imports from Brazil and Australia.
Given Australia’s geographic proximity to East and South Asia, this provides a distinct advantage to Australia when shipping ocean freight to Bangladesh, Pakistan and Vietnam. Australia is clearly capitalising on their increased production capacity and impressive yields, especially in the 2021/22 season.
The problem that today's cotton industry faces is getting the fibre to the spinners. Cotton has a lot of company in its struggle, as the Covid pandemic disrupted global shipping across many industries. But the cotton supply chain is longer and more complex than it is for most other commodities, especially since so much of the production in the West has to be shipped halfway around the world to the countries where it's transformed into textiles.
Those challenges are forcing countries to adapt by streamlining their supply chains. China, Vietnam and Pakistan imported large amounts of cotton from the United States in 2020/21. The graph below shows how the import profile has shifted away from the United States with large increases in imports from Brazil and Australia.
Given Australia’s geographic proximity to East and South Asia, this provides a distinct advantage to Australia when shipping ocean freight to Bangladesh, Pakistan and Vietnam. Australia is clearly capitalising on their increased production capacity and impressive yields, especially in the 2021/22 season.
The Secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 101 cents to 120 cents, with a midpoint at 109 cents per pound.
Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The Cotton Update, which is included in the Cotton This Month subscription, is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 March 2022. The next Cotton This Month will be released on 1 April 2022.
If you are a subscriber to ‘Cotton This Month’, please access your account with your user name and password by clicking here.
To subscribe to ‘Cotton This Month’, please click here, then click ‘Paid Publications’ and select the version you want to subscribe to.
Please contact the author, ICAC Data Scientist Matthew Looney, with questions on this report.
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About the International Cotton Advisory Committee (ICAC)
Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. In addition, members can take advantage of the ICAC’s global network of cotton researchers, whose expertise covers the supply chain from farm to textile manufacturing, and have free access to its cutting-edge technologies like the voice-based app and virtual technology cotton training programme. Committed to ensuring cotton’s continued sustainability, the ICAC is the only intergovernmental commodity body covering cotton that is recognised by the United Nations. For more information, please visit www.icac.org, Twitter or LinkedIn.
If you are a subscriber to ‘Cotton This Month’, please access your account with your user name and password by clicking here.
To subscribe to ‘Cotton This Month’, please click here, then click ‘Paid Publications’ and select the version you want to subscribe to.
Please contact the author, ICAC Data Scientist Matthew Looney, with questions on this report.
_______________________________________
About the International Cotton Advisory Committee (ICAC)
Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. In addition, members can take advantage of the ICAC’s global network of cotton researchers, whose expertise covers the supply chain from farm to textile manufacturing, and have free access to its cutting-edge technologies like the voice-based app and virtual technology cotton training programme. Committed to ensuring cotton’s continued sustainability, the ICAC is the only intergovernmental commodity body covering cotton that is recognised by the United Nations. For more information, please visit www.icac.org, Twitter or LinkedIn.