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Global cotton prices to remain stable in 2015/16: ICAC
04
Jul '15
International cotton prices may remain stable in 2015/16, though this will depend in part on changes in world cotton stocks.

“In 2014/15, world ending stocks are forecast up 9 per cent to 21.9 million tons, reflecting a stock-to-use ratio of 90 per cent,” a report from the International Cotton Advisory Committee (ICAC) stated.

According to the report, starting in 2010/11, the world has accumulated 13.4 million tons of stock due to production volumes exceeding consumption volumes.

However, in 2015/16, stocks are projected to decrease 5 per cent to 20.9 million tons, reducing the excess volume by 1 million tons.

Stocks held outside of China are expected to decline 3 per cent to just under 9 million tons, by the end of 2015/16.

“However, much of this will depend on how the Chinese government handles its reserves, the ICAC report observed.

Last month the Chinese government announced that it planned to start selling its stockpiles, estimated at around 11.3 million tons, at a price close to the current market price to keep the market stable.

“However, no further details have been announced so far, and it’s uncertain how successfully China will be able to sell off its excess cotton stock without destabilising the market,” the report noted.

World cotton area in 2015/16 is projected down 6 per cent to 31.3 million hectares, due largely to lower prices in 2014/15.

Assuming a world average yield of 764 kg/ha, production could reach 23.9 million tons, down 9 per cent from 2014/15.

China’s cotton area is forecast to drop by 12 per cent to 3.8 million hectares, and production is forecast to be down 16 per cent to 5.4 million tons in 2015/16.

Low cotton prices during 2014/15 in India are expected to cause cotton area to slip 5 per cent to 11.6 million hectares in 2015/16.

But falling prices for competing crops and a modest increase in the minimum support price may forestall a greater decline.

The Indian monsoon arrived earlier this year compared to 2014/15, and yields are expected to improve 3 per cent to 547 kg/ha, limiting the decrease in production to 6.4 million tons.

Low international cotton prices have limited farmer enthusiasm to plant cotton, and area in the United States may contract 15 per cent to 3.3 million hectares and production is forecast to decline 12 per cent to 3.1 million tons.

Area in Pakistan is projected to reduce 6 per cent to 2.7 million hectares due to low domestic prices in 2014/15, and production is expected to fall 11 per cent to 2.1 million tons. (AR)

Fibre2Fashion News Desk - India

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