According to the first 2020/21 global supply and demand forecast released by the United States Department of Agriculture in May, as countries around the world gradually emerge from the epidemic, global cotton consumption has begun to recover, reaching more than 116 million bales, a year-on-year increase of 11%. But it’s only slightly higher than the five-year average.
Consumption in the world’s top ten consumer countries is expected to increase, with China and India adding a total of 7 million packages, accounting for two-thirds of global growth. However, as the impact of the epidemic will still exist, global consumption is still lower than the level of previous years (more than 120 million packages).
Consumption of cotton products (including clothing and home textiles) is closely related to GDP growth. The recovery of global cotton demand depends on the reopening of retail stores and the employment situation in various countries. In 2019/20, due to store closures, consumers losing income, countries issuing stay-at-home orders, and non-essential businesses shutting down (including clothing stores), global end-use cotton consumption (i.e. cotton apparel and home textile retail) plunged sharply.
In 2020/21, global ending stocks are expected to increase slightly year-on-year, approaching the level of 100 million bales, an increase of nearly 20 million bales from two years ago. While China is expected to account for one-third of global inventories, its share is at an all-time low. Reserve cotton stocks are expected to remain at current levels, well below the five-year average, but commercial stocks are expected to remain elevated. Meanwhile, inventories outside China are expected to hit new highs. Under the influence of price support policies, India has accumulated more than half of its inventory growth since 2018/19.
In 2020/21, global cotton imports are expected to increase significantly, with the United States, Brazil and India expected to be the biggest beneficiaries. Export supplies from all three countries are near or at record highs due to high production and opening stocks. At the same time, the recovery of global cotton consumption will lead to an increase in imports, with imports from almost all major importing countries expected to increase. China’s imports are expected to increase by nearly 20% because China will continue to implement the first phase of the Sino-US trade agreement and expand its imports of US cotton. Pakistan’s imports are expected to increase significantly as domestic consumption recovers while production remains at very low levels. In addition, India and Turkey have huge initial inventories, which will suppress the import demand of the two countries and offset part of the growth of other countries.
In 2020/21, the average farm price of upland cotton in the United States is expected to be 57 cents, a year-on-year decrease of 2 cents.
In 2019/20, global consumption and imports continue to be significantly reduced, and ending stocks continue to increase significantly. Cotton consumption is reduced by more than 5 million bales, and the cumulative reduction since March is more than 13 million bales. Global imports are also in sync. Downward, the ending inventory increased by nearly 6 million bales month-on-month. U.S. production is increased, consumption is decreased, and ending stocks increase. The average farm price of upland cotton is 59 cents. </p
