ICAC: Stable World Cotton Trade Expected In 2015-16

WASHINGTON — October 1, 2015 — World cotton imports are projected to remain unchanged at 7.6 million tons in 2015-16. While China is likely to remain the world’s largest importer in 2015-16, its imports are forecast to fall by 12 percent to 1.6 million tons.

This represents 30 percent of its peak volume of imports in 2011-12. In 2015, the Chinese government restricted imports to the minimum volume required by the World Trade Organization to encourage mills to purchase domestic cotton. In July and August 2015, it sold nearly 60,000 tons from its reserve, but still holds 11 million tons. Given the large volume of production and reserves, imports are likely to be restricted again in 2016.

Meanwhile, imports by other countries are expected to grow 4 percent to 5.8 million tons. Imports in Bangladesh, Vietnam, and Indonesia, the next three largest importing countries, are all projected to grow in 2015-16. Bangladesh imports are forecast to increase 1 percent to 972,000 tons while Vietnam’s imports are forecast up 2 percent to 956,000 tons. After decreasing in 2013-14, Indonesia’s imports recovered 13 percent to 735,000 tons in 2014-15, and are expected to increase 6 percent to 782,000 tons in 2015-16. The United States is forecast to lead in export volume, although its exports are projected down 9 percent to 2.2 million tons due to a smaller volume of production in 2015-16. After declining 48 percent in 2014-15, India’s exports may recover 34 percent to 1.2 million tons. Exports in the next three largest exporting countries are likely to decrease due to reductions in their exportable surplus. Brazil’s exports are forecast down 10 percent to 766,000 tons, Uzbekistan’s down 5 percent to 565,000 tons and Australia’s down 10 percent to 467,000 tons.

World cotton area is projected to fall 7 percent to 31.1 million hectares in 2015-16 due to significantly lower cotton prices in 2014-15. As a result, world cotton production is expected to fall by 9 percent to 23.8 million tons. India’s cotton area is estimated down 5 percent to 11.6 million hectares, and production down 2 percent to 6.4 million tons. China’s cotton production is set to decline by 16 percent to 5.4 million tons due to a 12 percent reduction in area and a 5 percent decrease in the average yield as a result of unfavorable weather. After a 24 percent expansion in 2014-15, cotton area in the United States has receded 13 percent to 3.3 million hectares with production declining 11 percent to 3.2 million tons. Pakistan’s production is projected down 11 percent to 2.1 million.

World cotton consumption could grow 2 percent in 2015-16 to 25 million tons with consumption growth remaining flat or slowing in many countries compared with last season. Consumption in China, the largest cotton consuming country, is expected to remain flat in 2015-16 at 7.7 million tons. India’s consumption growth is expected to slow to 3 percent, reaching 5.6 million tons, while Pakistan’s consumption growth remains steady at 2 percent, reaching 2.6 million tons.

World Cotton Supply And Distribution

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
changes from previous month
million tons million tons
Production 26.29 26.11 23.84 0.00 -0.08 0.14
Consumption 23.61 24.47 25.03 0.00 0.01 -0.02
Imports 8.65 7.58 7.62 0.00 -0.06 0.00
Exports 9.00 7.72 7.62 0.00 -0.18 0.00
Ending Stocks 20.31 21.79 20.62 0.00 0.04 0.20
Cotlook A Index 91 71 74*

* 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: 62 cts/lb to 89 cts/lb.

Posted October 6, 2015

Source: ICAC