Cotton prices unlikely to see last two season levels: ICAC

06 Oct '14

2 min read

In 2014/15 cotton season, the prices of cotton are unlikely to witness the levels seen during the last two seasons, because of the predicted 1.8 million tons of surplus cotton production and changes in China’s cotton policy, the International Cotton Advisory Committee (ICAC) has said.

Cotton prices have continued to fall in the first two months of the news season, below the around 80 US cents/lb at the end of 2013/14. On the other hand, world cotton consumption is forecast to rise nearly 4 percent to 24.4 million tons with more of the consumption occurring in the latter half of the season as the market becomes more certain about the size of the new crop and can better determine an appropriate price for cotton, ICAC said in a statement.

“While cotton’s absolute volume of consumption is likely to grow, it will probably not gain back much of its market share as it takes time for the market to adjust. The price volatility observed in 2010/11-2011/12 is not forgotten, and other competing fibers’ market shares have been growing,” the statement said.

In the ongoing 2014/15 season, area under cotton has increased by 3 percent from the last season to 33.8 million hectares, due to higher international cotton prices in 2013/14. As a result, world cotton production is forecast to go up by one percent to 26.2 million tons.

In China, the province of Xinjiang, where the trial subsidy is being implemented, is likely to have bigger cotton harvest than last season. ICAC projects China’s overall cotton production in 2014/15 at 6.4 million tons.

India is on course to become the world’s largest cotton producer in 2014/15 with expected output of 6.6 million tons, as area under cotton increased by five percent after farmers switched to cotton due to delayed monsoon.

In the US, cotton production is forecast at 3.7 million tons, up 30 percent from 2013/14. The projection is based on expected increase in cotton area due to plentiful rainfall which reduces the abandonment rate this season.

In Pakistan, cotton production is unlikely to be majorly impacted by recent flooding and is forecast at 2.1 million tons in 2014/15.

ICAC expects China’s cotton imports to decline by 36 percent to 2 million tons in 2014/15, and accordingly, world imports would drop 11 percent to 8 million tons. (RKS)

Fibre2fashion News Desk - India

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