Cotton futures prices fell below 70 cents per lb on Wednesday, the lowest level since November 2012. High cotton prices at the start of the planting season (they peaked at 94.75 cents per lb in May) and weak prices for other crops such as corn encouraged US farmers to increase the amount of land they devoted to the crop. According to the USDA cotton growers in the US planted 11.4 million acres, up 9.3% compared with 2013. An easing in drought conditions in key producing state Texas also helped – a year ago more than 12% of the state was experiencing exceptional drought, now that area is down to 5%.
Reflecting better prospects for US output and weaker growth in consumption the International Cotton Advisory Committee (ICAC) forecast that cotton stocks in countries outside China (more readily available to the world market) will rise by 7% to 8.7 million tonnes at the end of this season (31 July) and by a further 15% to 9.7 million tonnes at the close of the 2014-15 season. With China’s reserve policy also coming to an end (previously guaranteed high prices for domestic Chinese mills encouraged significant imports into China), high stock levels suggest continued downward pressure on cotton prices over the next year.