Outside of China, global cotton stocks in 2017/18 are expected to rise by nearly 12 million bales, to a record 53 million. Despite a relatively strong forecast increase in global cotton use (3.8%), a 15 percent expansion in production will outpace demand, increasing global stocks. China’s cotton import policy remains a major wildcard.
Despite market rumors of possible increased import access, there has been no official indication of any change in the import policy. Therefore, 2017/18 imports are forecast at a similar level to last season.
These additional stocks will be spread across nearly all markets, though the exact burden will vary substantially. Major exporters will bear the brunt of the burden of high stocks, with Central Asia, Africa, the Southern Hemisphere, and the United States all forecast to have stock levels well above recent averages.
Meanwhile, cotton stocks in South Asia will grow as production increases three times as much as the region’s growth in use. Stocks throughout that region will be at unusually high levels, particularly in India, the major exporter.
If Bangladesh is able to repeat past peak growth rates, it could reduce some of these stocks; however, USDA’s forecast already assumes a relatively high growth rate for use and is unchanged this month.
Even import-dependent regions such as Southeast Asia will see stocks-to-use ratios above recent levels. As exporters work aggressively to reduce burdensome stock levels, buyers have opportunities to procure cotton at competitive prices, resulting in some of the increased global stocks being held in mills, warehouses, and other destination-country sites.
