2015/16 global cotton output to be down 6%: USDA

23 Jul '15

5 min read

Offsetting a portion of China's mill use reduction are increases for countries benefitting from China's yarn imports, including India and Vietnam.

For 2014/15, India is expected to use nearly 24.9 million bales of cotton, up 350,000 bales in the July report.

Similarly, the estimate for Vietnam mill use has risen to nearly 4.1 million bales, here too up 200,000 bales in the July report.

For 2015/16, global cotton mill use is currently projected at 114.4 million bales, 875,000 bales below the June forecast but 3 per cent above 2014/15 and the highest in five years.

China's 2015/16 mill use forecast was lowered 1.5 million bales to 34.5 million bales as recent government decisions will continue to support China's domestic prices into 2015/16 and limit mill use growth.

India and Vietnam are two countries that will likely benefit again in 2015/16. For India, mill use was increased 500,000 bales this month to nearly 26.3 million bales, a growth of more than 5.5 per cent.

For Vietnam, mill use was raised 650,000 bales in July to about 4.8 million bales, a growth of 17 per cent.

If realized, both countries would reach new records and account for a combined 27 percent of global cotton use in 2015/16, compared with 20 per cent just four years ago.

USDA has forecast world ending stocks at 108.1 million bales for 2015/16, a 2.5 per cent reduction or 2.9 million bales from the record level achieved in 2014/15, as global consumption exceeds production.

The US agricultural agency noted that as during the past several seasons, China will hold the bulk of these stocks.

However, stocks in China are projected to decrease for the first time in several seasons, declining 3 per cent or 1.8 million bales to 65.1 million bales.

Despite the reduction, China will account for 60 per cent of global stocks at the end of 2015/16, most of which are unavailable to the global market.

Stocks in Brazil are expected to decline 550,000 bales to 6.5 million bales in 2015/16 due to lower supplies, while stocks in India are forecast to decrease 500,000 bales to 12.9 million bales due to higher demand.

Based on the latest world supply and demand, USDA has projected the global stocks-to-use ratio to fall 6 percentage points to 94 per cent by the end of 2015/16. (AR)

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