Executive Summary
For the 2017/18 season:
- Global cotton production is expected to outpace consumption
- Ending stocks likely will increase 1.5% to 9.1 million tons
- Strong demand for textiles, especially in emerging markets, should benefit cotton
- Consumption is expected to increase 3.6% in 2017/18 and 4.4% in 2018/19
Lower Production, Higher Consumption Projected for 2018/19
If developments continue as expected, the short-term outlook for cotton is a positive one. Although global production is expected to outpace consumption (25.7 million tons vs. 25.4 million tons), strong textile demand in emerging markets will benefit cotton.
Consumption – which has steadily increased over the last three seasons – is expected to continue rising, with increases of 3.6% and 4.4% projected in 2017/18 and 2018/19, respectively.
Other factors buoying cotton are the rising production costs of synthetic fibres and growing awareness of the environmental damage being caused by microfibre pollution.
However, the threat of pests and inclement weather remain concerns. This season, the world’s largest producer, India, suffered yield losses due to a pink bollworm infestation and is expected to decrease to 12 million hectares in planted area in 2018/19. Planting intentions for the world’s largest exporter, the USA, reflect an increase to 4.9 million hectares in 2018/19, but drought conditions will need to be monitored closely, both in the USA and in Australia.
| WORLD COTTON SUPPLY AND DISTRIBUTION | |||||||
| 2015/16 | 2016/17 | 2017/18 | 2015/16 | 2016/17 | 2017/18 | ||
| Changes from previous month | |||||||
| Million Tons | Million Tons | ||||||
| Production | 23.09 | 25.67 | 25.35 | 0.00 | -0.12 | -0.02 | |
| Consumption | 24.52 | 25.40 | 26.52 | 0.00 | 0.04 | 0.05 | |
| Imports | 8.14 | 8.54 | 9.14 | 0.00 | 0.16 | -0.01 | |
| Exports | 8.19 | 8.54 | 9.14 | 0.00 | 0.16 | -0.01 | |
| Ending Stocks | 18.83 | 19.10 | 17.93 | 0.01 | -0.15 | 0.22 | |
| Cotlook A Index* | 83 | 83* | 84** | ||||
* The price projection for 2017/18 is based on the ending stocks-to-mill use ratio in the world-less-China in 2015/16 (estimate), in 2016/17 (estimate) and in 2017/18 (projection), on the ratio of Chinese net imports to world imports in 2016/17 (estimate) and 2017/18 (projection), and on the average price for the first 8 months of 2017/18. The price projection is the mid-point of the 95% confidence interval: 75 cts/lb to 87 cts/lb.
**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), 2017/18 (projection) and 2018/19 (projection); on the ratio of Chinese net imports to world imports in 2017/18 (projection) and 2018/19 (projection); and on the price projection for 2017/18. The price projection is the mid-point of the 95% confidence interval: 67 cts/lb to 106 cts/lb.
Source: ICAC