Cotton to Suffer 12 % decline in Global Consumption due to Covid-19 Pandemic

By guest author Lihan Wei from ICAC

We knew right away it would be bad, the only question was: How bad will it be? We’re beginning to find out now, based on the May 2020 edition of Cotton This Month. With the global economy paralysed and supply chains shattered, current projections show an 11.8% decline in cotton consumption, reducing global trade to 8.26 million tonnes in 2019/20.

While there is hope for a vaccine or cure, or that warmer weather in the Northern Hemisphere will minimise Covid’s impact, there can be no real economic recovery unless there is a health recovery first. Whether or not, we sink into a worldwide depression — a long recession with unemployment reaching as high as 33 % — will be determined by the effectiveness of government policies.

In 2020/21, global area is projected to decrease by 4 % to 33 million hectares, with India remaining the world leader despite plantings dropping to 12 million hectares. Production will decline by a comparable amount to 25 million tonnes. The Secretariat’s current price projection for the year-end 2019/20 average of the A Index has been revised to 71.4 U.S. cents per pound this month. The price projection for the year-end 2020/21 average of the A Index is 56.9 cents per pound this month.

Source ICAC

Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The Cotton Update, which is included in the Cotton This Month subscription, is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 May 2020. The next Cotton This Month will be released on 1 June 2020.