World Cotton Production rebounds and Consumption grows slightly
Global cotton production in 2016/17 is forecast at 101.6 million bales, 1 million bales below last month’s projection but 4.7 million bales above 2015/16. Despite the increase from last season, world production is still projected 9 % below world consumption
The production increase for 2016/17 is largely attributable to the United States, with gains also expected in Pakistan, India, and Brazil. Globally, the cotton yield is forecast to rebound and more than offset an area reduction to alternative crops this season. World cotton harvested area in 2016/17 is projected at 29.7 million hectares (73.3 million acres), about 3 % below last season and the lowest since 1986/87. However, the world yield is forecast at 745 kg/hectare (665 pounds per acre), pushing the 2016 crop above last season’s 12-year low.
For India—the leading cotton producer—the crop is forecast at 27.0 million bales in 2016/17, 2 percent above 2015’s 6-year low. In 2016/17, an above-average yield is expected to more than offset lower cotton area as farmers in India are reported to have planted alternative crops. In China, production is projected at 21.0 million bales in 2016/17, 4.5 % below a year ago as area devoted to cotton declines for the fifth consecutive season. At about 2.9 million hectares, China’s cotton area is at historic lows; however, the impact is reduced as area is more concentrated in the higher yielding Xinjiang region. China’s yield is forecast at a record 1604 kg/hectare in 2016/17.
Pakistan’s cotton production is projected at 8.0 million bales this season. While 2016/17 area is forecast at its lowest since 1988/89, Pakistan’s higher yield is expected to boost production from the 2015/16 7.0-million-bale estimate. Likewise, Brazil’s crop is projected to rise to 6.65 million bales in 2016/17, 550,000 bales above 2015/16 production. In Brazil, the increase is due to improved yields, as harvested area is forecast to be unchanged in 2016/17.
World cotton consumption in 2016/17 is expected to expand 1 % to 111.3 million bales, compared with 110.2 million bales of mill use last season. Cotton consumption in recent years has been slowed by the weak global economy and by price competition from manmade fibres. Nevertheless, global cotton consumption is projected to rise for the fifth consecutive season in 2016/17, which would be the highest since 2010/11.
Cotton consumption in China is forecast at 35.0 million bales in 2016/17, up from 34.0 million bales in 2015/16, as cotton product exports remain an important part of the country’s economy. Reserve sales of raw cotton since May have boosted available supplies to domestic mills producing these products and, at the same time, are expected to further limit cotton yarn imports, which were estimated at 9 million bale-equivalents of raw cotton during 2015/16.
India’s cotton mill use is forecast slightly lower in 2016/17 at 24.0 million bales as domestic supplies tighten, and yarn exports to China are expected to decrease. Cotton consumption for both Pakistan and Turkey is also projected to decline about 1 percent due to lower supplies, with mill use reaching 10.2 million bales and 6.6 million bales, respectively. On the other hand, growth is forecast to continue in Bangladesh and Vietnam, where record mill use has been noted for several consecutive seasons due to expansion of their textile industries. Cotton consumption in Bangladesh is forecast at 6.0 million bales in 2016/17, while in Vietnam it is projected to reach 4.7 million bales.
Global Trade Lower in 2016/17
World cotton trade is forecast at 34.0 million bales in 2016/17, 2.6 percent below last season and the lowest since 2008/09. With China’s imports projected to remain unchanged in 2016/17 at 4.5 million bales, reductions are seen for a number of countries, including Pakistan, Turkey, and Indonesia. Partly offsetting these decreases, however, are increased imports by Vietnam and Bangladesh, the leading importers in 2016/17. Despite the lower world import demand, reduced supplies in a number of exporting countries provide an opportunity for the U.S. export growth forecast this season. U.S. cotton exports are expected to rise more than 2 million bales in 2016/17, but these are mostly offset by the decline in India.
World Ending Stocks forecast to decline further in 2016/17
Global cotton stocks are projected to decrease 10 percent by season’s end to 89.6 million bales. Back-to-back stock reductions from the 2014/15 record of 112.4 million bales have dramatically lowered the ending stock estimate by nearly 23 million bales. Stocks are forecast to decline for the major producers in 2016/17 except the United States. Leading the reduction is China, where the aforementioned reserve sales and limited import expectations are projected to reduce stocks by nearly 10 million bales to 50.7 million bales in 2016/17.
Despite this sharp decline, stocks in China continue to account for the bulk of world stocks. However, China’s share of global cotton stocks is forecast to fall to about 57 percent in 2016/17, compared with 61 percent in 2013/14. Meanwhile, the share of ending stocks is projected to rise slightly for the United States, India, and the rest of the world in 2016/17. With lower ending stocks and higher consumption projected for 2016/17, the global ending stocks-to-use ratio is forecast to fall nearly 10 percentage points from a year ago. At the end of 2016/17, the stocks-to-use ratio is projected to reach 80.5 %, significantly below 2014/15’s 102 % and the lowest level in 5 years.