The latest inter-governmental report on the world’s cotton trade has lifted its forecast for global cotton stocks in the upcoming season, in a move that adds further weight to projections that international prices are set to stay low for another year.
The International Cotton Advisory Council (ICAC) expects stocks to grow by 10% to 15.1m tons in the 2012/13 season, which begins on 1 August. This compares to a forecast of 14.5m tons just a month ago.
By the end of July 2013, global cotton stocks could represent 64% of global consumption, it says – the highest stocks-to-use ratio since the mid-1980s. And “the projected accumulation of cotton stocks will weigh on international cotton prices in 2012/13.”
The volume of cotton traded internationally is likely to drop by 18% to 7.6m tons in 2012/13, down from 9.2m tons in 2011/12, largely due to an expected fall in demand from China.
The country nearly doubled its shipments last year to 5.1m tons as Chinese mills turned to imports to compensate for the shortage of domestic cotton caused by the rebuilding of the national reserve. In addition, large quantities of cotton were imported by the Chinese government specifically to help rebuild that national reserve.
But now that it holds large stocks, imports by China are projected to fall by almost half to 2.7m tons in the marketing year beginning next month, the ICAC says.
In contrast, imports by the rest of the world could rebound by 18% to 4.9m tons during the upcoming year, helped by a small rebound in global cotton mill use driven by lower prices and a more robust global economy.
Increased production in the US and Francophone Africa in 2012/13 are expected to lead to higher exports, but most other large exporting countries will see a decline in their shipments due to a smaller crop and increased competition for a reduced export pie.
Global cotton production in 2012/13 is forecast at 24.9m tons, down by 8% from the current season.