The International Cotton Advisory Committee reduced its expectation for the drop in cotton prices next season, forecasting a drop of nearly 1m tonnes in global stocks despite raising its hopes for production.
The intergovernmental group lifted by 7 cents a pound to 78 cents a pound its forecast for world cotton prices in 2017-18, as measured by the Cotlook A index of physical values, although that would still represent a fall from a spot price of 86.95 cents a pound.
The revision came even as the group upgraded by 430,000 tonnes, to 24.0m tonnes, its forecast for world cotton production in 2017-18, which starts in August, reflecting a 100,000-tonne lift to 1.5m tonnes in the Brazilian output estimate, and increased expectations for the US too.
The estimate for US area was lifted by 300,000 hectares to 4.6m hectares (11.4m acres), and for production, the forecast was raised by 200,000 tonnes to 4.2m tonnes (19.3m bales) – figures in line with those from the US Department of Agriculture.
ICAC vs other commentators
Nonetheless, the ICAC forecast global cotton stocks dropping by nearly 1m tonnes to 16.41m tonnes (75.4m) bales over 2017-18, a figure which would be the lowest in six years, besides being well below estimates from some other commentators.
The US Department of Agriculture forecasts stocks closing next season at 87.14m bales, while Cotlook last week forecast a 44,000-tonne increase in world inventories over 2017-18.
The ICAC is more pessimistic than Cotlook on world production, while more upbeat on consumption prospects.
The ICAC forecast world demand rising by 340,000 tonnes over 2017-18 "due to much stronger growth in the global economy in 2017 and 2018", with prospects particularly strong for the Indian sub-continent.
Bangladeshi demand was seen growing by 5% to 1.5m tonnes, and that in India itself by 3% to 5.2m tonnes "as prices for cotton and yarn are likely to be competitive due to the increase in supply", the committee said.
Consumption by China, the top user, was seen flat at 7.7m tonnes.