ICAC – COVID-19 Pandemic expected to weigh on Cotton Prices into 2020/21 Season

Executive Summary

 Highlights from the August 2020 Cotton This Month include:

•             After reaching a high in January 2020, international cotton prices fell through February and March

•             This month, the price projection for the year-end 2020/21 average of the A Index is 62.8 U.S. cents per pound

•             Cotton consumption for the 2019/20 season is expected to decline 12% to 23 million tonnes

•             Cotton consumption should improve in 2020/21 if there’s a global economic recovery but price competition from synthetics continues

COVID-19 Pandemic Expected to Weigh on Cotton Prices into 2020/21 Season

Even plummeting prices aren’t enough to offset COVID-19’s impact on global cotton consumption — but the situation could improve quickly, assuming the world gets the pandemic under control. The price projection for the year-end 2020/21 average of the A Index is 62.8 cents per pound this month.

The current 2020/21 cotton consumption forecast is 23.9 million tonnes, representing a 5% increase from the previous season. Cotton production for 2020/21, on the other hand, is projected to move in the opposite direction, posting a 5% decrease to 24.8 million tonnes largely due to 2 million hectare decrease in global area.

Cotton consumption is expected to recover in 2020/21 if global economic growth recovers as consumer demand increases, but as always it will continue to face stiff competition from synthetic fibres.

 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 August 17, 2020. The next Cotton This Month will be released on September 1, 2020.  

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.