The August global production demand forecast released by the International Cotton Advisory Committee (ICAC) believes that international cotton prices are expected to fall in 2020/21.
The report stated that after reaching a high in January 2020, international cotton prices fell in February and March. The 2019/20 Kotruk A index reached an annual low in April, with an annual average price of 71.3 cents/lb, the third consecutive annual decline due to a lack of orders. The global COVID-19 epidemic caused a sharp decline in cotton demand in March and April this year. Despite low prices, cotton spinning mills and garment weaving mills have reduced production due to lack of orders. Global cotton consumption in 2019/20 is expected to fall by 12% to 23 million tons.
In 2020/21, if global economic growth is achieved and low cotton prices promote an increase in economic activity and consumer demand, global cotton consumption is expected to recover, but it will still face continued competition from man-made fibers. Global cotton consumption in 2020/21 is expected to be 23.9 million tons, a year-on-year increase of 5%, and cotton production is expected to be 24.8 million tons, a year-on-year decrease of 5%. This is due to a decrease of 2 million hectares in global planting area. Although global ending stocks are expected to remain at a high level of 22 million tons, due to reduced production and increased consumption, the pressure on global ending stocks has eased month-on-month, and the inventory-to-consumption ratio is expected to drop to 96%.
In 2020/21, although India’s cotton production has remained at a high level due to timely planting and good monsoon rains, China’s cotton production is expected to decline due to a reduction in cotton planting area. U.S. cotton production is expected to be lower than previously expected due to drought in western Texas. The cotton planting area in Mexico is expected to decrease by 35%, and the output is expected to be 88,000 tons. The reduced demand for cotton in West Africa has had a great impact on exports. It is expected that the frustration of cotton farmers and the switch to other food crops will lead to a decline in cotton production in West Africa. The economic crisis caused by global public health events may have a negative impact on Egypt’s cotton planting area. Due to the increase in production costs caused by current inflation, cotton farmers will switch to food crops. The cost of cotton production in Turkey has increased, and the cotton planting area is expected to decrease by 12% to 400,000 hectares.
In 2019/20, a sharp decline in global consumption and an increase in production put pressure on the market. Falling cotton prices, oversupply and scarce demand reduced cotton exports. In addition to West African cotton, Indian cotton exports also declined significantly year-on-year. However, Indian cotton can be exported to neighboring major textile countries, and the domestic textile industry will recover after the epidemic.
ICAC estimates that the average price of Kotruk A in 2020/21 will be 62.8 cents/pound. </p
