ICAC: Cotton Production and ConsumptionInvert as the Season Comes to a Close

Executive Summary

Highlights from the June 2022 Cotton This Month include:

  • With two months left in the 2021/22 season, cotton consumption has overtaken and exceeded production
  • Global area for the 2022/23 season is estimated to decrease by 1% to 32.78 million hectares
  • Global production for the 2022/23 season is projected to be 26.13 million tonnes
  • Global consumption for the 2022/23 season is currently projected at 26.09 million tonnes  
  • Prices will be influenced by multiple, hard-to-predict events including governmental policies 

Cotton Production and Consumption Invert as the Season Comes to a Close
Decreases in the crop size of some top cotton-producing countries — including India, Argentina and South Africa — have resulted in consumption outpacing production as the 2021/22 season comes to a close. They were closely aligned through most of the year but given these smaller-than-expected crops, consumption is expected to exceed production by about 265,000 tonnes.

As the 2021/22 season comes to a close:

  • Global area is estimated to decrease by 1% to 32.78 million hectares
  • Global production is projected to be 26.13 million tonnes
  • Global consumption is currently projected at 26.09 million tonnes  

To asses the impact of those figures on prices, the stocks-to-use ratio — which measures the available cotton stocks as a share of cotton mill use — can help quantify the relationship between cotton supply and demand. When supply is tight compared to demand, the ratio is lower. A lower stocks-to-use ratio could indicate higher prices. In contrast, when supply exceeds demand then the ratio increases putting downward pressure on cotton prices. Planted area also can have a major impact on prices, as shown in the graph below:

Given so many variables and unknowns, the Secretariat is temporarily suspending publication of the price projections. We will reevaluate the price situation in August and determine if we should resume price forecast projection modelling. High volatility and extenuating circumstances in global markets make it difficult for any modelling framework to produce accurate and useful information. Please note that this is only a temporary pause and as soon as we are confident in the model data we will release projections. From a historical perspective, the only other time the price model was suspended was during the 2010/11 season of unprecedented high price and volatility.

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 June 2022. The next Cotton This Month will be released on 1 July 2022.

If you are a subscriber to ‘Cotton This Month’, please access your account with your user name and password by clicking here.

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Please contact the author, ICAC Data Scientist Matthew Looney, with questions on this report.

About the International Cotton Advisory Committee (ICAC)
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. In addition, members can take advantage of the ICAC’s global network of cotton researchers, whose expertise covers the supply chain from farm to textile manufacturing, and have free access to its cutting-edge technologies like the voice-based app and virtual technology cotton training programme. Committed to ensuring cotton’s continued sustainability, the ICAC is the only intergovernmental commodity body covering cotton that is recognised by the United Nations. For more information, please visit www.icac.org