Between stay-at-home orders and massive job losses due to the coronavirus, consumers are shunning apparel purchases, with the impact being felt all the way to the farm level, said the International Cotton Advisory Council on Monday. The intergovernmental group said that global stockpiles would rise for the second year in a row during 2020/21 and that cotton prices would remain under pressure.
The ICAC estimated world cotton production would drop by 4 percent, to 25.2 million tonnes, in 2020/21, as farmers curtail plantings in the face of low market prices. “With decreasing use, ending stock levels are expected to rise to 21.8 million tonnes, with the stocks-to-use ratio at record high levels,” said the ICAC in a brochure. It recommended that governments take care so that agricultural supports during the public health crisis “do not have unintended consequences, e.g., increasing supply that further push down prices.”
The USDA expects a similar situation domestically. It projects a slightly smaller crop in 2020 and a larger stockpile at the end of the marketing year. However, it expects domestic use and exports of cotton to rise as the world economy begins to recover. This year’s cotton crop was projected to sell for an average of 57 cents per pound, the lowest season-average price since 2008/09. The USDA will update its projections on Thursday.