Steady Consumption, Declining Production Will Draw Down Stocks


 

Executive Summary

Highlights from the February edition of Cotton This Month regarding the 2018/19 season:

  • World ending stocks are projected to decrease by 5% to 17.6 million tonnes
  • China’s production is expected to increase by 1%, bringing its total to 5.94 million tonnes, replacing India as the world’s largest producer
  • Global consumption projections remain at 26.8 million tonnes
  • Prices are feeling some pressure due to concerns about overall economic growth but should remain steady due to solid fundamentals

 

 

 

Steady Consumption, Declining Production Will Draw Down Stocks

 

By the conclusion of the 2018/19 season, world stocks are projected to drop to 17.6 million tonnes, reflecting a decrease of 5% from the prior year and registering the fourth straight year of decline. Consumption is expected to remain steady but a 3% decline in global production will draw down the world’s warehouses.

 

Production in China is expected to increase 1% to 5.94 million tonnes, and when combined with a 7% decline in India’s production due to insufficient rainfall, the changes mean China will regain the ‘top producer’ title it lost to India in the 2015/16 season. 

 

Although cotton prices have come under pressure, current projections for global consumption are unchanged at 26.8 million tonnes, with production projected to be slightly lower at 25.9 million tonnes. In the opinion of the Secretariat, cotton prices are feeling the effects of uncertainty related to the global economic environment, as opposed to the impact of trade barriers. Price fundamentals still look solid, as reflected in the price forecast.

 

 

 World Cotton Supply and Distribution

 

2016/17

2017/18

2018/19

2016/17

2017/18

2018/19

Changes from previous month

Million Tonnes

Million Tonnes

Production

23.08

26.72

26.12

 

0.00

-0.03

-0.24

Consumption

24.50

26.88

26.72

0.00

0.07

0.10

Imports

8.09

9.00

9.42

 

0.01

0.10

-0.08

Exports

8.19

9.09

9.42

0.01

0.10

-0.08

Ending Stocks

18.71

18.51

18.16

 

-0.04

-0.24

-0.58

Cotlook A Index

83

88

87*

 

 

 

 

 

 

*The price projection for 2018/19 is based on the ending stocks-to-mill use ratio in the world-less-China in 2016/17 (estimate), in 2017/18 (estimate) and in 2018/19 (projection), on the ratio of Chinese net imports to world imports in 2017/18 (estimate) and 2018/19 (projection), and the average price of 2017/18. Projection reflects 95% confidence interval.

 

 

Published at the start of each month by the Secretariat of the International Cotton Advisory Committee,

1629 K Street NW, Suite 702, Washington, DC 20006. Copyright © ICAC 2019.

No reproduction is permitted in whole or part without the express consent of the Secretariat.

 

 

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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. The ICAC does not have a role in setting market prices or in intervening in market mechanisms. For more information, please visit www.icac.org.