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. (No paywall)
The rising price of man-made fibers will make cotton more attractive to the apparel industry and boost global cotton consumption by 3 percent this market year, said the International Cotton Advisory Committee.
Two of the major fibers available to clothing manufacturers are cotton and polyester. Cotton is becoming more price-competitive against petroleum-based polyester, which should boost global demand for the field-grown fiber, but it won't stop a build-up of cotton supplies, says the International Cotton Advisory Committee.
The prevailing high prices for cotton “are expected to encourage farmers to expand the area under cotton by 5 percent, to 30.8 million hectares, in 2017/18,” says the International Cotton Advisory Committee.
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.
World cotton prices were boosted by a smaller-than-expected 2015/16 crop and remain high despite a larger harvest this year, says the International Cotton Advisory Committee, pointing to currency turmoil in India. "The currency crisis ... is exacerbating the situation, since that country is the world's largest producer of cotton and the second-largest exporter," says the intergovernmental body.
The world stockpile of cotton reached a record 22.2 million tonnes, with nearly 60 percent of it held by China. The government sold 2 million tonnes of surplus cotton from May to September of this year and the International Cotton Advisory Committee estimates China will sell an additional 1.7 million tonnes, partly because it is restricting the domestic supply by holding imports to the minimums required under trade agreements.
China has sold around 1.6 million tonnes of cotton from its state-owned reserve since daily auctions began in May, sharply reducing the burdensome stockpile, said the International Cotton Advisory Committee.
At the same time China is whittling down its huge cotton surplus, high production costs will discourage its farmers from growing the fiber this year, says the International Cotton Advisory Committee. "Area in China is expected to decrease by 10 percent, to 3.1 million hectares in 2016/17," says ICAC, and with normal yields "production would fall by 10 percent, to 4.6 million tonnes."
Low oil prices are translating into low prices for polyester fiber, especially in China, which produces nearly three-fourths of the world's polyester, says the International Cotton Advisory Committee.