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World cotton consumption has been revised downward from initial projections to 24.4 million tons, up less than 1% from 2014/15. In its October 2015 report, the International Monetary Fund lowered its forecast for world economic growth in 2015 to 3.1%. Despite optimism from the narrowing gap between polyester prices and cotton prices at the start of 2014/15 and falling domestic cotton prices, cotton consumption in China remained unchanged from 2013/14 at 7.5 million tons. With the latest revision, mill use in China is now forecast at 7.3 million tons in 2015/16. As China’s spinning sector continues to decline, mill use in Asia has grown. India, the world’s second largest consumer of cotton lint may see mill use rise by 3% to reach 5.5 million tons in 2015/16. However, Pakistan, which had in previous years benefited from the growing demand for cotton yarn in China, is expected to see mill use decrease this season by 10% to 2.2 million tons. In addition to reduced demand from China, an ongoing energy crisis, high energy costs, and high taxes that greatly add to the cost of production have caused many mills to reduce operations, and in some cases to shut down entirely. Turkey’s consumption is projected to increase by 5% to 1.4 million tons, due in part to expanding private consumption in the EU and political after its most recent elections. Lower production costs and favorable government policies for the textile sectors in Bangladesh and Vietnam will encourage consumption growth in these countries. Mill use in Bangladesh is forecast to rise by 10% to just over 1 million tons while in Vietnam, by 20% to 1.1 million tons. With consumption slowing, world cotton imports are forecast to decline by 3% to 7.4 million tons in 2015/16, which would constitute the fourth consecutive season in which import volume declined after peaking at 9.8 million tons in 2011/12. China’s imports are expected to shrink by 33% to 1.2 million tons. Imports by Vietnam during the first two months of 2015/16 are up 63% from the same period last season and may reach 1.1 million tons by the end of the season. World cotton production is forecast to fall by 12% to 23.1 million tons, which is 1.3 million tons lower than projected demand in 2015/16. Decreases are expected in all five top producing countries. India’s production may decrease by 4% to 6.3 million tons due to reduced plantings and pest problems. China is in its fourth consecutive season of declining production, and its volume in 2015/16 is projected down 19% to 5.3 million tons. In the United States, a 13% reduction in harvested area and lower yields are expected to cause production to fall by 18% to 2.9 million tons. Production in Pakistan is forecast to reach around 1.9 million tons in 2015/16 while in Brazil, it is projected to decease by 6% to 1.5 million tons. World ending stocks are expected to fall by 6% to 20.7 million tons, which represents about 85% of the volume needed for world mill use in 2015/16. Stocks in China are projected to be just under 12 million tons at the end of 2015/16, while stocks outside of China are forecast down by 4% to 8.7 million tons. WORLD COTTON SUPPLY AND DISTRIBUTION

2013/14 2014/15 2015/16      2013/14 2014/15 2015/16

Million Tons            Million Tons    Changes from previous month

Production     26.27  26.18  23.11           -0.01 0.02 -0.81

Consumption 23.88  24.24  24.37          0.25 -0.24 -0.67

Imports            8.67   7.60    7.35           0.00 0.00 -0.12

Exports             8.99    7.71   7.35            0.00 0.00 -0.12

Ending Stocks  20.08 21.92 20.65           -0.21 0.06 -0.08

Cotlook A Index 91 71 70* *

The price projection for 2015/16 is based on the ending stocks/consumption ratio in the world-less-China in 2013/14 (estimate), in 2014/15 (estimate) and in 2015/16 (projection), on the ratio of Chinese net imports to world imports in 2014/15 (estimate) and 2015/16 (projection). The price projection is the mid-point of the 95% confidence interval: 61 cts/lb to 82 cts/lb

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