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ICAC foresees uncertain cotton prices in 2017-18
03
Aug '17
US-based International Cotton Advisory Committee (ICAC) foresees uncertain cotton prices in 2017-18 despite a projected production increase of 8 per cent worldwide and a rise in consumption by 2 per cent. World cotton trade is projected to decline by 1 per cent to 7.8 million tonnes. India is expected to be the largest producer with a 6 per cent output rise.
 
The ICAC, formed in 1939, is an association of members of cotton producing, consuming and trading countries.
 
The A Index (a proxy for the world price of cotton) in 2017-18 will range between 54 cts/lb (US cents per pound) and 87 cts/lb with a midpoint of 69 cts/lb, which is 13 cts/lb lower than the value in 2016-17.  This follows the large increase of 12 cts/lb from 2015/16 to 2016/17, which suggests that such a drop is not unreasonable, the ICAC said on its website.
 
In 2017-18, world cotton production is projected to increase by 8 per cent to 24.9 million tonnes due entirely to an 8 percent expansion in world cotton area to 31.7 million hectares, which is below the 20-year average of 32.7 million hectares. The world average yield is forecast at 785 kg/ha. World cotton consumption in the same period is expected to rise by 2 percent to 25 million tonnes.
 
India is projected to remain the largest cotton producer in 2017-18 with output increasing by 6 per cent to 6.1 million tonnes. After declining by 3 per cent in 2016-17, consumption in the country is expected to increase by 2 per cent to 5.3 million tonnes in 2017-18. India’s exports may rise by 2 percent to 930,000 tonnes.
 
After falling by 6 percent in 2016-17, China’s production is projected to rebound by 7 per cent to 5.2 million tonnes. A modest 1 per cent consumption increase is projected for the country, the world’s largest cotton consumer, with its mill use reaching 8.1 million tonnes in 2017-18.
 
US cotton production is expected to rise by 10 per cent to 4.1 million tonnes as high prices, sufficient soil moisture in dry land areas and beneficial weather during planting encouraged farmers to expand cotton area by 18 per cent to 4.5 million hectares. While the United Sates is expected to remain the world’s largest cotton exporter, its exports are forecast to decrease by 8 per cent to 2.9 million tonnes.
 
After two seasons of contraction, better expected returns for cotton encouraged farmers to expand cotton area in Pakistan by 9 per cent to 2.7 million hectares. Assuming the average yield rises by 8 per cent to 717 kg/ha, Pakistan’s production is projected to increase by 17 per cent to 2 million tonnes, which is similar to its 15-year average. Pakistan’s mill use is expected to rise by 4 per cent to 2.2 million tonnes, which follows a 13 per cent decrease in mill use in 2015-16 and stagnation in 2016-17.
 
Cotton production in Brazil is forecast to increase by 5 per cent to 1.6 million tonnes as high returns in 2016-17, resulting partially from a 17 per cent increase in the average yield, are likely to encourage farmers to expand cotton area.
 
Bangladesh, Vietnam and China are expected to remain the world’s three largest importers. Bangladesh’s imports are projected to increase by 7 per cent to 1.5 million tonnes, Vietnam’s by 5 per cent to 1.3 million tonnes, and China by 4 per cent to 1.1 million tonnes.
 
Consumption in Bangladesh is projected to rise by 5 per cent to 1.5 million tonnes due to strong domestic and international demand, and Turkey’s mill use is expected to remain stable at 1.5 million tonnes. Australia’s cotton exports are projected to increase by 8 per cent to 760,000 tonnes.
 
World ending stocks are projected to decrease by 1 per cent to 18.8 million tonnes in 2017-18, with increases outside of China offset by decreases in China’s stocks. China’s stocks are expected to decline by 16 per cent to 8.9 million tonnes. Ending stocks outside of China are forecast to grow by 19 per cent to 9.8 million tons, according to the ICAC. (DS)

Fibre2Fashion News Desk – India


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