USDA raises 2017-18 global cotton production forecast

The projected increase in cotton output is due to price-driven area increases for most major cotton producers, and significant improvements in the outlook for a few countries, namely Pakistan, China, and Mexico, the USDA said in its monthly report ‘Cotton: World Markets and Trends’.

“Despite this improving outlook, however, global production remains below the levels seen before the extremely poor-yielding 2015-16 crops. Recovery in production has varied by region, but it is notable that almost alone among major cotton-producing regions, the African Franc Zone is forecast to yield its largest crop ever obtained, at about 5.2 million bales,” the report said.

The forecasts show an upward revision for consumption growth from 2.2 per cent last month to 2.6 per cent. Forecasts for China, India, and Pakistan were all raised appreciably, boosting the forecast growth rate for consumption without greatly increasing forecast demand for imports, especially as China and Pakistan have larger forecast 2017-18 production, and thus comparatively ample expected supplies.

The consumption revision, however, is smaller than the upward revision to global production, resulting in higher forecast ending stocks. Furthermore, global trade forecasts are lowered, driven by lower import demand in producer countries, especially Pakistan. These higher forecast 2017-18 ending stocks are located outside of China (where forecasts of the degree of destocking have been increased), with the result that USDA continues to expect pressure on prices, forecasting a year-over-year decline in the US farm price.

The 2017-18 US season-average farm price forecast is unchanged at 64 cents per pound. For 2016-17, the US season-average farm price forecast is reduced half a cent to 68.5 cents per pound. (RKS)

Fibre2Fashion News Desk – India