Executive Summary
Highlights from the August 2019 edition of Cotton This Month:
• Optimism for a surge in global cotton demand in 2019/20 is waning.
• There was hope China and the USA would resolve their trade differences at the G20 meeting; there were no breakthroughs but talks continue.
• Prices have dropped from 99.5 US cents per pound in August 2018 to 74 US cents in July.
• Production in 2019/20 is expected to reach 27.2 million tonnes (up 6% from prior year), with consumption increasing 1.7 % to 26.9 million tonnes.
Supply Up, Prices Down: Expectations for 2019/20 Cotton Demand Are Slumping
Global cotton consumption is projected to increase by 1.7 % in the coming season, but if production grows by the expected 6%, it will exceed production by about 300000 tonnes. As a result, global stocks should swell to 18 million tonnes. Those factors, combined with tepid expectations for global economic expansion, have dimmed the hopes for next season’s cotton demand.
Before meeting at the G20 meeting at the end of June, there was some hope that the trade war between the USA and China would be resolved. While tariffs have not escalated since then, talks remain stalled and they remain in place.
Cotton prices have been suffering from negative news since the market hit its season high of 99.5 cents per pound in August 2018, plummeting to 74 cents per pound by July 2019.
At 5.9 million tonnes, China is expected to remain the world’s largest producer in 2019/20, topping India’s projected 5.75 million tonnes. West Africa, meanwhile, is expected to see its production hit an all-time high of 1.3 million tonnes.
ICAC Welcomes Nigeria as Its 29th Member
The International Cotton Advisory Committee (ICAC) has announced that Nigeria is joining the organisation, becoming its 29th Member and 11th Member in Africa.
Government officials in Nigeria have been working to reinvigorate their cotton and textile industries for years because converting cotton into textiles and finished goods generates much more revenue than exporting raw fibre, leading to higher incomes and new job creation.
But before Nigeria can revive its textile industry, which once accounted for as much as 25% of the jobs in the country’s manufacturing sector, it must first enhance its cotton industry — and that’s where ICAC membership comes in.
In addition to its publications and data, ICAC is currently working on two major initiatives that would hold great promise in Nigeria:
• An interactive, voice-based Soil and Plant Health app that allows farmers to diagnose and treat pests and diseases right in their fields, even if they are illiterate, and
• A Virtual Reality training program that will allow scientists and researchers to ‘visit’ a cotton field and view best practices, seeing the plant in various stages of development in a short period of time, all without leaving the classroom.
‘We are thrilled to welcome Nigeria into the ICAC community’, said Kai Hughes, ICAC Executive Director. ‘Nigeria is a key producer in West Africa and its membership underlines not only the importance of cotton to its economy but also the importance of the ICAC and its role in fostering a healthy and sustainable cotton economy for its Members. The ICAC is working hard to increase yields in Member states and for Africa in particular; there should be no reason why yields in most if not all cotton producing countries cannot be doubled’.
Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. The ICAC does not have a role in setting market prices or in intervening in market mechanisms.