The volume of cotton traded internationally is expected to decline by 8% to 8.1 million tons in 2014/15, driven by reduced shipments to China from a record of 5.3 million tons in 2011/12 to an anticipated 2.1 million tons 2014/15. While the increased volume of trade benefited many exporting countries and farmers, it did not reflect improved demand for cotton. In 2011/12 when imports increased by 26% to 9.8 million tons, world consumption decreased by 7% to 22.8 million tons, the smallest consumption since 2003/04. While world consumption is forecast to increase by 3% to 24.2 million tons in 2014/15, it remains below the level seen in the seven years before international cotton prices spiked.


 


In 2011/12, China implemented its policy of buying domestic and imported cotton for its national reserve and consequently became a large importer of cotton. Since 2011/12, the high price of cotton in China hurt its spinning industry, but helped the spinning industry in other countries, such as India, Pakistan, Bangladesh, Indonesia, and Vietnam. In 2012/13, the season after China’s implementation of its new cotton policy, IndiaΆs consumption grew by 12% to 4.8 million tons and is expected to grow by 7% to 5.4 million tons in 2014/15. Similarly, PakistanΆs consumption grew by 9% to 2.4 million tons in 2012/13 and is forecast to grow by 3% to 2.6 million tons in 2014/15. Bangladesh, Indonesia, and Vietnam also experienced similar growth in 2012/13 in consumption and should continue growing in 2014/15, though at a slower rate. In contrast, ChinaΆs consumption fell by 4% in 2012/13 to 8.3 million tons and is expected to fall by 1% in 2014/15 to 7.8 million tons.


 


In 2014/15, exports from Greece and the CFA zone are forecast to rise by 6% and 3%, respectively. However, exports from other large producing countries are expected to decrease in 2014/15. The United StatesΆ exports are expected to decrease by 1% to 2.26 million tons while AustraliaΆs exports are expected to decrease by 23% to about 800,000 tons. Additionally, India, the second largest exporter, could see a decrease of 21% to 1.1 million tons in 2014/15 as more of its cotton is consumed domestically.


 


World ending stocks are forecast to increase by 12% in 2013/14 to 20 million tons, and then to expand by another 5% in 2014/15 to 20.1 million tons. Additionally, ending stocks outside of China are expected to increase by 7% to 9.1 million tons in 2014/15 as China will be importing less of the surplus production than in the last 2 seasons. The projected accumulation of cotton stocks will weigh on international cotton prices in 2014/15, particularly as more stocks will be held outside of China. 

* The price projection for 2013/14 is based on the ratio of ending stocks to mill use in the world-less-China in 2011/12 (estimate), 2012/13 (estimate) and 2013/14 (projection), and on the ratio of Chinese net imports to world imports in 2013/14 (projection). The price projection is the mid-point of the 95% confidence interval: 88 cts/lb to 94 cts/lb.

**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 (projection) and 2014/15 (projection), on the ratio of Chinese net imports to world imports in 2014/15 (projection), and on the price projection for 2013/14. The price projection is the mid-point of the 95% confidence interval: 71 cts/lb to 106 cts/lb.