Global Cotton Stocks to Continue Accumulating in 2012/13
As 2012 plantings are starting in the northern hemisphere, prices of cotton are much reduced from last year, making competing crops more attractive to farmers. World cotton area is expected to contract by 4% to 34.5 million hectares. Based on average yields, production could decline by 5% to 25.7 million tons in 2012/13. This small reduction in output breaks the increasing trend of the last two seasons.
On the other side, after two seasons of decline, global cotton mill use is projected to increase by 4% to 24.3 million tons in 2012/13, driven by improving economic growth and lower cotton prices. Of course, any setback in the global economy could affect this projection.
Production will therefore exceed consumption again in 2012/13, leading to rising stocks. After a rebound of 40% to a record of 13 million tons in 2011/12, global cotton stocks could expand by 11% to 14.5 million tons in 2012/13. This is equivalent to 60% of global mill use, the largest stocks-to-use ratio since the late 1990s. This accumulation of cotton will weigh on international cotton prices in 2012/13.
The rebuilding of the Chinese national reserve means that by the end of 2011/12, it might hold as much as a quarter of global stocks. The Secretariat assumes that this reserve will continue growing in 2012/13, albeit at a much slower rate than in 2011/12. ICAC’s 2012/13 forecasts are marked by a significant uncertainty regarding the handling of the Chinese national reserve.
WORLD COTTON SUPPLY AND DISTRIBUTION
2010/11 2011/12 2012/13 2010/11 2011/12 2012/13
Million Tons Changes from January
Million Tons
Production 25.107 27.183 25.73 0.000 0.396 0.787
Consumption 24.506 23.423 24.28 0.052 -0.313 -0.032
Exports 7.624 7.787 8.31 0.000 0.098 0.069
Ending Stocks 9.330 13.090 14.54 0.077 0.787 1.606
Cotlook A Index* 1.64 1.06**
* Season-average Cotlook A Index (U.S. $ per pound).
* Average for the first seven months of the season (August 2011 to February 2012).
