Five nations – India, China, the United States, Pakistan and Brazil – account for three-fourths of global cotton production and all of them, except for China, will expand output in the current trade year, says the International Cotton Advisory Committee. With harvests forecast to rise by 8 percent worldwide, there will be pressure on cotton prices during the final half of the year.
The intergovernmental committee says cotton prices are expected to average 74 cents per pound this year, up by 4 cents from 2015/16. The global stockpile of cotton fell by 3 million tonnes during the past year and is forecast to drop by 1.3 million tonnes this year, to roughly 18 million tonnes. The world uses more than 24 million tonnes of cotton a year, which is much larger than the forecast of a crop of 22.8 million tonnes this year, so the inventory will continue to shrink.
“While prices for polyester, the main competing fiber, have risen in recent weeks, they remain well below international cotton prices, making it unlikely that cotton mill use will expand this season unless polyester prices continue to rise,” said ICAC in a monthly report.