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, India’s 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, Pakistan’s 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, China’s 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 States’ exports are expected to decrease by 1% to 2.26 million tons while Australia’s 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.
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WORLD COTTON SUPPLY AND DISTRIBUTION |
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2012/13 |
2013/14 |
2014/15 |
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2012/13 |
2013/14 |
2014/15 |
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Changes from previous month |
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Million Tons |
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Million Tons |
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Production |
26.68 |
25.63 |
25.16 |
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-0.19 |
-0.07 |
0.00 |
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Consumption |
23.29 |
23.48 |
24.19 |
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-0.05 |
-0.07 |
-0.15 |
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Imports |
9.87 |
8.81 |
8.08 |
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0.00 |
0.09 |
-0.09 |
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Exports |
10.08 |
8.81 |
8.08 |
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0.00 |
0.09 |
-0.09 |
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Ending Stocks |
17.8 |
19.94 |
20.92 |
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-0.09 |
-0.10 |
0.05 |
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Cotlook A Index* |
88 |
91* |
87** |
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* 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.