Better Yields to Boost Cotton Production in 2016/17

Date Posted: 01 Jul, 2016
In 2015/16, world cotton production fell by 17% to 21.7 million tons, the lowest volume since 2003/04. Low international cotton prices at planting time led to a 9% contraction in area to 31.1 million hectares and the world average yield decreased by 9% to 699 kg/ha. However, while area is expected to contract by 1% to 31 million hectares in 2016/17, the average yield is projected to improve by 5% to 735 kg/ha, which would cause production to increase by 5% to 23 million tons. Cotton area in India is expected to expand by 1% to 12 million hectares in 2016/17, and production to increase by 8% to 6.3 million tons. Better monsoon weather may boost yield by 6% to 521 kg/ha, though pest pressure remains a concern. Cotton area in China is projected to decline by 10% to 3.1 million hectares due to high production costs and reduced government support, and production is forecast to decrease by 10% to 4.7 million tons. After contracting by 14% to 3.3 million hectares in 2015/16 due to less attractive cotton prices and overly wet soil conditions preventing planting in some areas, cotton area in the United States is expected to expand by 5% to 3.4 million hectares, and production could increase by 14% to 3.2 million tons. In 2015/16, Pakistan’s average yield declined by 32% to 528 kg/ha while production fell to 1.5 million tons as pink bollworm, which is hard to spot in the field, re-emerged as a significant pest. However, measures are being taken to help combat the pes, and as a result, yield is expected to partially recover by 25% to 662 kg/ha in 2016/17. Nevertheless, cotton area is likely to contract by 5% to 2.7 million hectares as farmers switch to competing crops with better returns, and production is projected to increase by 19% to 1.8 million tons.
Global consumption is forecast to remain at 23.6 million tons in 2016/17 as low prices for competing fibers make cotton less attractive. Consumption in China is projected to decline by 5% decline to 6.8 million tons. However, mill use is likely to grow by 11% to 1.2 million tons in Vietnam and by 10% to 1.2 million tons in Bangladesh. Despite declining demand for imports of cotton yarn by China in 2015/16, mill use in India is expected to recover by 3% to 5.4 million tons and in Pakistan by 1% to 2.2 million tons.
While mill use remains stagnant in 2016/17, world cotton trade volume may increase by 1% to 7.4 million tons. China’s imports are expected to decrease by 8% to 947,000 tons as the Chinese government continues to restrict imports in order to reduce its sizeable stocks of cotton. However, imports outside of China are forecast to increase by 3% to 6.5 million tons. Given the larger exportable surplus available in the United States, exports are projected to increase by 18% to 2.3 million tons in 2016/17.
World stocks at the end of 2016/17 are projected to decrease by 5% to 19.46 million tons as mill use exceeds production by 930,000 tons. Ending stocks in the rest of the world are forecast to rise by 3% to 8.7 million tons, though the stock-to-use ratio outside of China would be similar to the 36% registered last season.

  2014/15 2015/16 2016/17   2014/15 2015/16 2016/17
          Changes from previous month
  Million Tons   Million Tons
Production 26.12 27.74 22.73   0.00 -0.06 -0.28
Consumption 24.28 23.65 23.66   -0.05 -0.01 -0.11
Imports 7.60 7.34 7.44   0.00 -0.03 -0.07
Exports 7.64 7.34 7.44   0.00 -0.03 -0.07
Ending Stocks 22.29 20.40 19.46   0.07 0.01 -0.20
Cotlook A Index* 71 70 72        
* The price projection for 2015/16 is based on the ending stocks/consumption ratio in the world-less-China in 2013/14 (estimate), in 2014/15 (estimate) and in 2015/16 (projection), on the ratio of Chinese net imports to world imports in 2014/15 (estimate) and 2015/16 (projection). The price projection is the mid-point of the 95% confidence interval: 69 cts/lb to 71 cts/lb.
** The price projection for 2016/17 is based on the ending stocks/consumption ratio in the world-less-China in 2014/15 (estimate), in 2015/16 (projection) and in 2016/17 (projection), on the ratio of Chinese net imports to world imports in 2015/16 (projection) and 2016/17 (projection). The price projection is the mid-point of the 95% confidence interval: 58 cts/lb to 86 cts/lb.

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