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World 2012/13 cotton consumption & ending stocks to rise
15
May '12
World 2012/13 cotton consumption is forecast to rise 3 percent from the previous year to nearly 110.0 million bales, as a result of lower cotton prices relative to polyester and a slight improvement in global economic activity.

The International Monetary Fund's (IMF) most recent World Economic Outlook Report has the global economy growing at 3.5 percent in 2012 and 4.1 percent in 2013. The 2012 growth estimate is weaker than the 3.9 percent growth in 2011. At the same time, current and projected lower cotton prices are likely to improve cotton's share of global fiber demand.

In China, where the IMF estimates 2012 gross domestic product growth at 8.2 percent (down from a 9.2 percent growth in 2011), mill use is forecast at 41.0 million bales, down 2 percent from the previous year.

China's reserve accumulation policy has pushed domestic cotton prices above world levels, and the mills there have responded by reducing cotton's fiber share of textile consumption and substituting imports of cotton yarn. Lower spinning use in China will benefit cotton consumption in other countries, especially Asian yarn producers.

India is forecast to consume 21.0 million bales in 2012/13, up 8 percent from a year ago. If realized, this will be its second highest mill use on record. The IMF estimates India's economy to grow 6.9 percent in 2012, compared with 7.2 percent in the previous year.

India's economic growth, however, is forecast to rebound to 7.3 percent in 2013, strengthening the domestic demand for cotton and adding to the impact of rising textile exports. In Pakistan, 2012/13 cotton consumption is forecast at 11.0 million bales, up 10 percent from the previous year.

Turkey is forecast to consume 5.6 million bales in 2012/13, up 6 percent from the preceding year, as mills increase investment in new equipment and infrastructure to expand capacity and meet growing demand for its textile products. In the United States, mill use is forecast at 3.5 million bales in 2012/13, an increase of 3 percent from a year ago.

The IMF forecasts the United States economy to grow 2.1 percent and 2.3 percent in 2012 and 2013, respectively, modestly higher than the growth in 2011. Brazil's 2012/13 mill use is forecast at nearly 4.3 million bales, up 6 percent from a year ago.

World ending stocks are forecast to a record 73.7 million bales in 2012/13, a 10- percent increase from the preceding year. Ending stocks are forecast to rise in most cotton producing and countries, with the notable exception of Brazil.

The forecast build-up in global ending stocks is driven by world production, which is expected to outpace consumption in both 2011/12 and 2012/13, along with China's continued national reserve stocks accumulation policy. For more details, see the highlight section on China's cotton reserve policy in this report. USDA projects global stocks-to-use to rise to 67 percent in 2012/13, compared with 63 percent in the previous year.


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