The August global production demand forecast released by the International Cotton Advisory Committee (ICAC) believes that global cotton production is expected to recover in 2021/22. After experiencing a 7% decline in 2020/21, global cotton production is expected to increase by 3% in 2021/22, reaching 25 million tons.
The increase in global cotton production mainly comes from India, China, Brazil and the United States. U.S. cotton production is expected to increase by 22% year-on-year to 3.8 million tons, mainly due to a 27% increase in harvest area to 4.2 million hectares, and a 10% rejection rate is used for calculations. The U.S. cotton harvest area is lower than before the epidemic, and the average yield is expected to be 912 kg/hectare, lower than the nearly ten-year average of 942 kg/hectare, so the U.S. cotton output should be able to reach this level.
India’s cotton output is expected to remain stable at 5.9 million tons. After the new cotton planting is completed, the outline of harvested area and output will become clearer. New cotton sowing is still in progress and is expected to end in mid-August.
Brazil’s cotton area in 2021/22 is still unclear, and sowing will not begin until November at the earliest. Currently, Brazil’s 2020/21 harvest is underway and is expected to last until September. The harvested area is 1.3 million hectares and the output is expected to be 2.3 million tons, a year-on-year decrease of 18% and 22% respectively. As of the end of July, Brazil’s 2020/21 cotton pre-sale volume was 82%.
In 2020/21, Pakistan’s cotton harvest area and output dropped significantly, with the area decreasing by 21% to 2 million hectares and the output decreasing by 33% to 890,000 tons. The main reasons are uncertain weather conditions, severe insect infestations and government incentives to encourage food production, which have led many cotton farmers to switch to other crops such as sugar cane and corn. In 2021/22, Pakistan’s cotton output will remain basically unchanged year-on-year, but due to the obvious domestic gap, cotton imports will remain active.
In 2020/21, global cotton consumption and trade experienced a positive recovery, with consumption increasing by 12.4% to 25.5 million tons. This trend is expected to remain in 2021/22. In 2020/21, global cotton exports increased by 14.9% year-on-year, reaching 10.4 million tons. Under the influence of the overall recovery of the global economy, the recovery of the textile and apparel market and the growth of cotton export demand, global cotton opening stocks in 2021/22 fell year-on-year to 20.9 million tons.
In 2020//21, U.S. cotton exports and imports are expected to increase by 6% year-on-year to 3.5 million tons, and Brazil’s export volume is 2.3 million tons, a year-on-year increase of 20%. China is the largest Export destination.
At present, the “Delta” mutant virus is still posing a threat to the recovery of the cotton market. Although cotton consumption is recovering, the rising number of confirmed cases of the new coronavirus may lead to a decline in textile production and retail sales. Infections have recently begun to rise in Bangladesh and Vietnam, where lockdowns have shuttered factories and hampered export shipments, making it difficult for factories to fulfill orders.
ICAC predicts that the annual average price of Kotruk A index in 2021/22 will be 73-125 cents/pound, with the middle price being 95.43 cents/pound.
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