The world cotton surplus will top 21 million tonnes at the end of this marketing year, an 87 percent stocks-to-use ratio, says the International Cotton Advisory Council. “Even assuming reasonably lower production and higher consumption in the next few years, it will take several seasons for the significant volume of stocks to reach a more sustainable level, and low cotton prices are likely to persist while the market adjusts,” says the intergovernmental body. World cotton production is likely to fall by 6 percent in 2015/16, allowing a minor reduction of 120,000 tons in cotton stockpiles. Cotton prices were above 90 cents a pound last spring and fell below 70 cents in December. They are forecast to average 72 cents in 2015/16.
India will displace China as the world’s largest cotton grower for 2014/15, says ICAC. India’s production “is expected to remain stable at 6.8 million tonnes due to less favorable monsoon weather this season despite an expansion in the cotton area by 5% to 12.3 million hectares,” says ICAC. Due to lower domestic prices and smaller plantings, Chinese production would fall by 7 percent, to 6.4 million tonnes.
In a poll, U.S. analysts said they expect U.S. cotton plantings of 9.8 million acres this year, down 11 percent from 2014 and smallest area since 2009 due to low prices, says Reuters. Based on conditions in late 2014, USDA projected a 9 percent decline this year for plantings of upland cotton, which accounts for the great majority of production.