World cotton yields to recover faster than area in 2016-17
Yield recoveries, rather than a rebound in area, will foster some recovery in world cotton production next season, the International Cotton Advisory Committee said, in a report which trimmed price expectations for the fibre
The committee, in its first comments on world cotton output in 2016-17, said that the relative appeal of returns from the fibre, in the face of low prices of rival crops, would prompt some extra plantings.
“Poor returns for competing crops and relatively stable cotton prices may encourage farmers to plant more cotton,” the intergovernmental group said.
However, the increase in area will amount to just 1 %, taking it to 31.9m hectares – and reversing only a small portion of the 8 % slump in 2015-16.
“Modest increases in cotton area in India, Pakistan and the US are expected to offset losses in China, Brazil and Uzbekistan,” the ICAC said.
Yields are expected to recover
With the committee forecasting world cotton output rising by 3.7 % to 23.0 million tonnes in 2016-17, the estimate implies that the gain in production will be driven by improved yield results.
The ICAC noted that, in 2015-16, “adverse weather in many countries led to the world average yield decreasing by 7 % to 711 kilogrammes per hectare”.
The assessment tallies with an outlook on February 26, 2016 from the USDA, the US Department of Agriculture, in its first forecasts for world cotton in 2016-17, that area “is projected to remain about even, while yields are expected to recover from the adverse weather and pest problems” that hurt 2015-16 output.
A yield rebound is forecast in particular for Pakistan, whose last harvest was badly affected by a plague of whitefly.
China debate
In fact, both organisations offered identical forecasts for world cotton output next season, with the USDA’s estimate of 105.5 million bales equivalent to 23.0 million tonnes.
The ICAC and USDA were broadly in line on expectations for consumption too, with figures of 24.0 million tonnes and 110.5 million bales (24.1 million tonnes) respectively.
However, the ICAC is more conservation on estimates for world inventory levels at the close of 2016-17, pegging them at 19.5 million tonnes – well below the 99.1 million bales (21.6 million tonnes) forecast by the USDA.
The gap between the forecasts is largely down to different estimates for stocks in China, which the USDA foresees ending this season at 14.0m tonnes – 2m tonnes above the committee’s forecast.
Nonetheless, taking into account weaker current cotton prices, the ICAC trimmed by 1 cent to 70 US cent a pound its forecast for values, as measured by the Cotlook A index, in 2015-16.