In 2014/15, the world cotton industry is expected to enter its fifth consecutive season in which production exceeds consumption. World production is forecast to decline by 400,000 tons to 26.05 million tons while consumption could grow by 4% to 24.4 million tons, resulting in a surplus of 1.7 million tons. Since 2010/11, world production will have exceeded consumption by a cumulative 12.3 million tons and by the end of 2014/15, would reach nearly 14 million tons. Much of the surplus is held by the Chinese government, but this season, more of the surplus will shift to the private sector in China and other producing countries.


 


As a result of the cumulative surplus, world ending stocks are projected to increase to 22.2 million tons at the end of 2014/15 with ending stocks outside China forecasted to achieve a record 9.7 million tons. This expansion in world ending stocks outside China will put negative pressure on prices this season as China continues to liquidate its significant stocks. Sales from the Chinese reserve reached 2.3 million tons in 2013/14. During August, the Chinese government sold an additional 300,000 tons, decreasing the estimated quantity of cotton stocks held by the Chinese government to around 11 million tons. The Secretariat expects that over the next few years, the Chinese government will maintain sales from the reserve at a pace of 2-3 million tons a year.


 


In 2014/15, China and India will vie for the title of largest producer of cotton, as the full impact of this year’s monsoon on IndiaΆs yields is unknown. Due to the late arrival of the monsoon, the planting season was extended and area in India is estimated at 11.8 million hectares, up by 1.3% from 2013/14. Assuming a yield based on the 3-year average of 536 kilograms per hectare, IndiaΆs production is expected to decline by 4% to 6.3 million tons. In response to the ending of government support outside Xinjiang, China decreased area by 8% to 4.2 million hectares. ChinaΆs production in 2014/15 would decline to 6.4 million tons, assuming an average yield of 1500 kilograms of lint per hectare. After much needed rain arrived in this summer, the United States should see reduced abandonment and improved yields with production forecast to reach 3.7 million tons with an average yield of 933 kilograms per hectare.


 


While world consumption in 2013/14 experienced no growth from 2012/13, it is predicted to expand by 4% in 2014/15. Consumption in China could rise to 7.9 million tons in 2014/15, up from 7.5 million tons in 2013/14 given the fall in both international and domestic prices as well as improved demand overseas for downstream goods. IndiaΆs demand is projected to reach 5.3 million tons in 2014/15, which is the third season of demand growth.


 


World trade is projected to decline by 1 million tons to 8 million tons in 2014/15, which is largely accounted for by a 30% decrease in Chinese imports to 2 million tons. With bumper crops anticipated in the United States and India, these two countries will remain the largest exporters in 2014/15. 

*The price projection for 2014/15 is based on the ending stocks/mill use ratio in the world-less-China in 2012/13 (estimate), in 2013/14 (estimate) and 2014/15 (projection), on the ratio of Chinese net imports to world imports in 2013/14 (estimated) and 2014/15 (projection). The price projection is the mid-point of the 95% confidence interval: 66 cts/lb to 95 cts/lb.