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Stock outside China to keep global cotton price down: ICAC
02
May '15
According to the International Cotton Advisory Committee (ICAC), excess cotton stocks held outside China are likely to keep international cotton prices down in 2015-16.

Stocks outside China are projected to surge 26 per cent to 9.4 million tons, the highest level in 35 years and also the reason, why ICAC forecasts that these stocks will keep global prices down.

In its latest report, ICAC projects world acreage under cotton to decline 7 per cent from 2014-15 to 31.2 million hectares in 2015-16.

Assuming a world average yield of 765 kg/ha, production in 2015-16 is forecast to be down 9 per cent at 23.9 million tons as against in 2014-15.

After reaching a record acreage of 12.3 million hectares in 2014-15, acreage in India is forecast down 5 per cent to 11.6 million hectares and production is also expected to fall 3 per cent to 6.4 million tons in 2015-16.

The Chinese government announced a cotton subsidy price of 19,100 Yuan per ton for 2015, a decrease from 19,800 Yuan per ton in 2014.

Accordingly, ICAC said, acreage in China is expected to contract 12 per cent to 3.8 million hectares and production could fall 16 per cent to 5.4 million tons.

According to ICAC, in the US, prices for some competing crops are likely to discourage farmers from planting cotton, and acreage is expected to dip 17 per cent to 3.3 million hectares.

“Assuming an average yield of 912 kg/ha, production in the US could reach 3 million tons in 2015-16,” the cotton trade body informed.

Pakistan’s production is on track to reach over 2.3 million tons in 2014/15, around 100,000 down from peak production of 2.4 million tons it achieved in 2004-05.

Pakistan’s average yield is expected to set a new record in 2014-15 and is projected to be higher by 14 per cent to 810 kg/ha.

However, in response to low prices, cotton acreage in Pakistan is forecast down 6 per cent to 2.7 million tons and production to also descend 11 per cent to 2 million tons in 2015-16.

ICAC said in the last two seasons, sales from China’s national reserve were well underway in April with around 1.3 million tons sold at the end of April 2013 and 1.4 million tons at the end of April 2014.

Although China announced last spring that it was ending its reserve policy, the Chinese government still holds over 11 million tons and sales were initially anticipated to occur this spring.

However, sales have not yet begun and the Chinese government has not announced an official date for sales to start this year.

To bolster sales of cotton from the current season’s crop and potentially sales from reserves, the Chinese government limited import quota in 2015 to the volume required under WTO rules of 894,000 tons.

ICAC adds that although Chinese domestic prices have fallen, they are still relatively high compared to international prices and also to polyester prices.

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