Increased Production in the USA, Pakistan and Brazil Will Offset Losses in China

Date Posted: 03 Oct, 2016
In 2016/17, the world cotton area is forecast to fall by 1% to 30 million hectares, which is the smallest amount of area under cotton since 2009/10, when the planted area reached 29.7 million hectares. The average yield is projected to improve by 9% to 753 kg/ha, and world production in 2016/17 is expected to increase by 7% to 22.6 million tons. Cotton area in India contracted by 8%, to just under 11 million hectares, due to competition from other crops such as maize. However, a 9% increase in the average yield to 526 kg/ha will likely offset the losses in area and production is expected to remain stable at 5.8 million tons. China’s cotton production is projected down 4% to 4.6 million tons despite a 3% gain in the average yield to 1,600 kg/ha. The total area brought under cotton in China shrank by 7% to 2.8 million hectares, the lowest in more than 30 years. Higher cotton prices compared to competing crops at the time of planting led to a 20% increase in cotton area in the United States, estimated at 3.9 million hectares. Beneficial weather during the growing season is expected to lead to a 5% improvement in the average yield to 899 kg/ha. As a result, cotton production in the United States is forecast to increase by 25% to 3.5 million tons. Although the cotton area in Pakistan declined by 12% to 2.5 million hectares, its production in 2016/17 is projected to rise by 26% to 1.9 million tons as the national average yield increases by 43% to 756 kg/ha due to the success of the preventative measures taken against pink bollworm. Improved yields in Brazil could increase its cotton production by 7% to 1.4 million tons.
In 2016/17, world cotton consumption is forecast to remain unchanged from 2015/16 at 23.8 million tons, but is projected to exceed production by 1.3 million tons. As a result, world stocks are projected to decline by 7% to 18.1 million tons. Although China’s consumption is forecast to decline for the seventh consecutive season by 2% to 7.2 million tons, it will continue to be the world’s largest consumer of cotton. Although domestic cotton prices have fallen since China implemented its direct production subsidy policy, they remain above levels on the international market and well above polyester prices. India’s cotton consumption is projected to remain stable at 5.2 million tons as mills increase the share of other fibers in cotton-blended yarns. Pakistan’s mill use is expected to increase by 23,000 tons to 2.3 million tons, assuming that the energy situation improves.
Exports from the United States are projected to increase by 26% to 2.5 million tons while exports from India, the second largest exporter, are forecast to fall by 35% to 820,000 tons. Bangladesh is expected to remain the world’s largest importer as its volume increases by 10% to 1.2 million tons in order to satisfy growing demand. Similarly, Vietnam’s imports are projected to rise by 15% to 1.1 million tons. 

  2014/15 2015/16 2016/17   2014/15 2015/16 2016/17
          Changes from previous month
  Million Tons   Million Tons
Production 26.20 21.10 22.54   0.01 -0.08 0.09
Consumption 24.20 23.78 23.81   0.00 -0.07 0.00
Imports 7.57 7.23 7.41   0.00 0.02 -0.08
Exports 7.73 7.49 7.41   0.01 0.13 -0.08
Ending Stocks 22.31 19.37 18.10   0.00 -0.13 -0.04
Cotlook A Index* 71 70 73        
* 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 (estimate) and in 2016/17 (projection), on the ratio of Chinese net imports to world imports in 2015/16 (estimate) and 2016/17 (projection). The price projection is the mid-point of the 95% confidence interval: 62 cts/lb to 88 cts/lb.

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