Highlights from the February edition of Cotton This Month regarding the 2018/19 season:
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
Changes from previous month
Cotlook A Index
*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.
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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.