According to the ICAC, world ending cotton stocks are expected to decline 8 per cent to 20.4 million tons, which makes up for around 86 per cent of global cotton use in 2015/16.
“This is the first reduction in world ending stocks since 2009/10,” ICAC informed in a press release.
China’s ending stocks are forecast to decrease by 7 per cent to 12 million tons, while ending stocks for the rest of the world are expected to decline by 9 per cent to 8.4 million tons.
“However, this reduction in stocks is due to a 15 per cent decline in world cotton production, estimated at 22.2 million tons, and not due to growth in consumption,” the cotton body observed.
“In fact, world cotton consumption is projected to decrease by 2 per cent to 23.9 million tons, as low polyester prices, the main competing fibre, has hurt world cotton consumption in 2015/16,” it explained.
Cotton consumption in China, the world’s largest consumer, has declined continuously since 2009/10 when it reached just over 10 million tons.
In 2015/16, cotton consumption in China is forecast at 7.1 million tons, down 5 per cent from last season, while India’s cotton consumption too is expected to drop 2 per cent to 5.3 million tons.
Cotton consumption in Pakistan is projected to dip 12 per cent to 2.2 million tons due to weakened demand from China and the low volume of cotton production this season keeping domestic cotton prices firm.
In contrast, consumption in Vietnam may increase 22 per cent to 1.1 million tons in 2015/16 as China continues to invest in spinning mills there and Bangladesh’s mill use is forecast to expand 13 per cent to 1.1 million tons.
As per ICAC, in 2016/17, world cotton consumption is projected to remain stable as modest growth in the top consumers outside of China offsets the decline in China’s cotton consumption.
Aside from Australia where production is forecast to increase by 6 per cent to 546,000 tons, cotton production in the top 10 cotton producing countries all declined in 2015/16.
World cotton area contracted by 8 per cent to 31.2 million hectares as low cotton prices in 2014/15 and higher prices for competing crops discouraged farmers from planting cotton.
Adverse weather in many countries led to the world average yield decreasing by 7 per cent to 711 kg per hectare and India’s cotton production fell 7 per cent to just under 6 million tons.
Production in China decreased for the fourth consecutive season by 20 per cent to 5.2 million tons and in the United States by 21 per cent to 2.8 million tons.
Pakistan’s production is estimated down 34 per cent to 1.5 million tons due to pest pressure and inferior inputs lowering yields.
“In 2016/17, poor returns for competing crops and relatively stable cotton prices may encourage farmers to plant more cotton, and cotton area may expand 1 per cent to 31.9 million hectares,” ICAC noted.
Modest increases in cotton area in India, Pakistan and the United States are expected to offset losses in China, Brazil and Uzbekistan. World cotton production is projected to increase by 3% to 23 million tons in 2016/17.