As the world economy recovers from the severe 2020 downturn, global cotton consumption is expected to grow by 4.1 per cent in 2021-22 season, substantially above the long-term average rate of 1.7 per cent, according to the US department of agriculture (USDA). This will be the second consecutive year when world consumption will exceed production.
World cotton stocks are expected to reduce by 3.2 million bales, according to the initial world and US cotton outlook for the 2021-22 season released by USDA in February at the Agricultural Outlook Forum.
Meanwhile, world cotton production is expected to rise 4.7 per cent with the most significant year-over-year growth in Pakistan, Australia, Brazil, the United States, and West Africa, the Foreign Agricultural Service (FAS) of the USDA said in its March 2021 report 'Cotton: World Markets and Trade'.
Overall, strong cotton consumption growth in 2021-22 and tightening stocks are expected to support prices with the A-Index forecast up 7 cents to 90 cents/pound for the marketing year. "If realised, this would be the highest in 8 years," the report said.
The USDA had published initial 2021-22 cotton balance sheets for two countries—the United States and China. For the US, "production is up 17 per cent to 17.5 million bales as planted area remains stable and abandonment declines on the assumption of normal weather. However, weather conditions, especially in Texas, provide significant downside risk. Consumption is expected to rise to 2.5 million bales, but still nearly 500,000 bales lower than 3 years prior; exports are expected to remain at 15.5 million bales. As a result, ending stocks are forecast at 3.8 million bales, a 5-year low." USDA said.
China’s 2021-22 imports are forecast at 11.0 million bales, unchanged from the previous year’s level, which was the highest level in 7 years. Further growth in yarn and fabric production, coupled with lower domestic production, is expected to maintain strong imports in addition to the State Reserve maintaining an optimal level of government-held stocks comprised of both imports and domestic supplies. China’s consumption is projected to increase at a rate below the world average due to above average growth in 2020-21. It is because China realised an earlier recovery from the impacts of COVID-19 relative to other major consumers, with the resultant 2020-21 consumption growth rate above the world average.
