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China to start sales from cotton reserves on March 6
03
Mar '17
The Chinese government is likely to start sales from its cotton reserves on the sixth of this month, offering around 30,000 tons a day until the end of August 2017. If sales are strong and market prices rise, the government may put up more cotton for auction, the International Cotton Advisory Committee (ICAC) says in its latest world cotton analysis.

Last year, around 2.6 million tons of cotton were sold by the Chinese government through the end of September 2016. Assuming a similar volume is sold this year, the total volume held by the Chinese government will reach 6 million tons by the end of 2016-17. As a result, China's total stocks, including those in the private sector, are forecast to reach 9.3 million tons at the end of 2016-17, accounting for 53 per cent of world stocks, the ICAC report said.

In 2017-18, world cotton consumption is projected to exceed production by 1.2 million tons and stocks are expected to decline for the third consecutive season to 16.7 million tons. China's ending stocks could fall by 19 per cent to 7.5 million tons, accounting for 45 per cent of world stocks at the end of 2017-18. This would mark the first season since 2011-12 that China's stocks account for less than half of world inventories. World ending stocks outside of China are forecast to grow by 7 per cent to 8 million tons, which could place downward pressure on prices later this season.

Meanwhile, global cotton production is forecast to grow by 23.1 million tons on a planted area of 30.4 million hectares in 2017-18. India's cotton production is projected to rise by 2 per cent to 5.9 million tons, as area expands by 7 per cent to 11.2 million hectares. China's cotton production may increase by 2 per cent to 4.8 million tons, but will greatly depend on whether a subsidy is provided this year. While high cotton prices relative to competing crops is likely to lead to a large increase in planted area expected in the US in 2017-18, production is forecast to rise by just 1 per cent to 3.7 million tons. Assuming normal weather patterns, the harvested area is projected to expand by 3 per cent to just under 4 million hectares. Pakistan's cotton production is forecast to grow by 11 per cent to 1.9 million tons. Its cotton area is projected to expand by 3 per cent to 2.5 million hectares as high prices this season encourage farmers to plant, and the average yield may grow by 8 per cent to 736 kg-ha as the crop recovers from pest pressure.
 
After declining by 1 per cent to 24 million tons in 2015-16, world cotton consumption is expected to remain stable in 2016-17. Given the strong demand this season and anticipated world economic growth in 2017 and 2018, world mill use is forecast to increase by 1 per cent to 24.3 million tons, the report said.

World trade is expected to expand by 3 per cent to 8 million tons in 2017-18. China's import volume is expected to rise by 11 per cent to 1.1 million tons in 2017-18 as its mill use continues to outpace its production. Bangladesh's imports are projected to rise by 3 per cent to 1.5 million tons in 2017-18, while Vietnam's imports are forecast to increase by 7 per cent to 1.24 million tons. The US is expected to remain the world's largest exporter and its volume is forecast to rise by 5 per cent to 2.9 million tons in 2017-18. Exports from India, the world's second largest exporter, are projected to grow by 3 per cent to 990,000 tons. (RKS)

Fibre2Fashion News Desk – India


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