World ending stocks of cotton are forecast to decrease by 7 per cent to 17.8 million tons at the end of 2016-17 as China continues to reduce its stocks. Ending stocks in China, where much of the excess stocks are held, dipped 13 per cent to 11.3 million tons as the government sold over 2 million tons from its reserves from May through September 2016.
From 2009-10 to 2014-15, world ending stocks increased by 140 per cent and reached a world record of 22.2 million tons. In 2015-16, the drop in world production led to a 14 per cent reduction in stocks to 19.1 million tons.
Meanwhile, the Chinese government restricted import quota to the volume required by its WTO commitments in 2015 and 2016. The government has also announced that it will continue to sell from its reserves next year, beginning March 2017 when the majority of the new crop will have been sold.
As a result of the government selling from its reserves, cotton stocks in China are expected to decline by 15 per cent to 9.6 million tons by the end of 2016-17. However, stocks outside of China may rise by 4 per cent to 8.2 million tons, after falling by 16 per cent to 7.9 million tons, the International Cotton Advisory Committee (ICAC) said in a release.
The stock-to-use ratio for the world less China is projected at 34 per cent, which is about four months of consumption, and in line with the 10-year average.
In 2016-17, world cotton production is projected to increase by 7 per cent to 22.4 million tons as a 9 per cent increase to 753 kg-ha in the world average yield offsets a 2 per cent contraction in world cotton area to 29.7 million hectares. India will remain the world’s largest cotton producer, although its production is forecast to remain unchanged from 2015-16 at 5.8 million tons. Output in China is projected to decrease by 4 per cent to 4.6 million tons while production in the US is expected to grow by 24 per cent to 3.5 million tons. After a 34 per cent drop in production due to adverse weather, competition with other crops, low prices and an outbreak of pink bollworm, Pakistan’s cotton production is expected to recover by 24 per cent to 1.9 million tons in 2016-17. After facing lower inventories in 2016 due to strong export demand, cotton production is forecast to increase by 8 per cent to 1.4 million tons in Brazil.
In 2016-17, world cotton consumption is projected to remain unchanged at 23.8 million tons, despite the widening gap between polyester prices and international cotton prices. Mill use is expected to rise in three of the top ten consuming countries – Bangladesh, Vietnam, and the United States, where consumption is forecast to increase by 12 per cent to 1.2 million tons, 13 per cent to 1.1 million tons and 1 per cent to 762,000 tons, respectively. This will offset losses in China, Turkey and Brazil, where mill use is projected to decrease by 2 per cent to 7.2 million tons, 3 per cent to 1.45 million tons, and 12 per cent to 645,000 tons, respectively. (RKS)
Fibre2Fashion News Desk – India
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