ICAC: A Rare Period of Stability in an Up-and-Down Cotton Season

Executive Summary

Highlights from the July 2022 Cotton This Month include:

  • With little movement in the numbers from last month, global consumption (26.15 million tonnes) is still expected to exceed production (25.91 million tonnes)
  • Things are not expected to remain stable for long, with issues from the pandemic and conflict in Eastern Europe still impacting the market
  • The cotton industry — and entire planet — will face much worse consequences if the looming global food crisis comes to pass
  • As has traditionally been the case, African nations will be hit the hardest by a food shortage

A Rare Period of Stability in an Up-and-Down season
The ending cotton season has been a lot of things, but stable and consistent aren’t really among them. However, production and consumption in the final month of the 2021/22 season are virtually unchanged from the numbers in June.

Australia’s forecast has been revised upward slightly, adding 119,000 tonnes to the 2021/22 season and 41,000 tonnes for 2022/23. Consumption remains unchanged at 26.15 million tonnes, which still surpasses the expected production of 25.91 million tonnes despite Australia’s larger contribution.




However, don’t let the seeming stability fool you about what’s coming. The drastic increase in fuel and energy costs have had a direct impact on fertiliser prices and availability.

Worse, there are growing concerns that the world will experience multiple famines as a result of the conflict in Eastern Europe, which spells trouble for everyone but especially African nations. During the 2007-08 hunger crisis, the ICAC observed reductions in area under cotton and a decrease in production in Africa, especially the C4(+2) (Benin, Burkina Faso, Chad, Mali, Cote d’Ivoire and Senegal). The effects from those reductions persisted through the 2011/12 season.

There is some good news, however: Africa has made gains in developing The African Continental Free Trade Area (AfCFTA), which went into effect on  May 30, 2019, and the agreement has the potential to facilitate the movement of commodities across borders with the elimination of tariffs on most goods and services. The ICAC has been actively engaged in education and training efforts in several African countries, including the concept of regenerative agriculture. Those projects are longer-term but add significantly to the African cotton industry’s outlook in the coming years.

Given so many variables and unknowns, the Secretariat is temporarily suspending publication of 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 July 15, 2022. The next Cotton This Month will be released on August 1, 2022.

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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