By Jessica Domel
Multimedia Reporter
Global cotton use is forecast to outpace production this year, according to a new report from the U.S. Department of Agriculture (USDA).
World cotton production is forecast to fall 3.6 percent to 117 million bales this year.
“Area devoted to cotton is projected to fall more than 3 percent, to about 32 million hectares, as Indian producers in states affected by bollworm resistance reduce plantings, and Southern Hemisphere producers respond to lower relative prices following the Northern Hemisphere harvest,” the report said. “For global production, the largest year-to-year decline of any country is expected to occur in the United States—despite little change in harvested area—as yields drop from the record-high realized in 2017/18.”
Consumption is forecast to continue growing, but at a more moderate pace.
“Consumption in China is likely to grow slightly faster than the world average for the fourth consecutive year—reaching 41.2 million bales—and slower growth is expected on average elsewhere in the world. Growth in Southeast Asia will be mixed, with above-average growth in Vietnam offsetting lower growth in Indonesia and stagnation in Thailand,” the report said.
Worldwide, consumers are forecast to use 122.9 million bales of cotton in 2018/2019.
“Another factor boosting cotton consumption in 2017/18 has been competitive cotton prices vs. polyester. This is likely to persist into 2018/19, as cotton prices are expected to decline. Over the 2009-2012 seasons, cotton suffered a loss in its share of world fiber consumption that was unprecedented in its severity and persistence. Since then, cotton has managed to lose share more slowly than its 1960-2008 median annual rate of decline,” the report said.
Additional demand for cotton will continue to come from increased demand for all fibers, rather than a recovery in share of fibers, according to the report. Favorable prices have reportedly slowed or temporarily halted the pace of cotton’s share loss.
In the United States, cotton farmers are forecast to produce less cotton in 2018/2019, but that’s due largely to record high yields achieved in 2017/2018.
Domestic production is forecast to fall eight percent to 19.5 million bales. That’s about two percent, or 222,000 acres, above the National Cotton Council (NCC) survey.
“USDA anticipates that cotton planted area will be higher than the NCC survey results, in part, because of the recently passed legislation—incorporated into the 2014 Farm Bill for 2018—that provides an opportunity to reassign generic base acres to “seed cotton” base and/or other covered commodities based on an established planting history USDA forecasts an increase in planted acres of about 5.5 percent to approximately 13.3 million acres. That will likely be offset by higher abandonment, forecast at 20 percent this year, and lower yields,” the report said.
A national average yield of 828 pounds harvested per acre is forecast.
USDA forecasts an increase in planted acres of about 5.5 percent to about 13.3 million acres. That will likely be offset by higher abandonment, forecast at 20 percent this year, and lower yields.
Exports of American cotton are projected to rise this year, but ending stocks are expected to remain unchanged.
“U.S. cotton exports are projected at a 13-year high of 16.0 million bales in 2018/19, due to expectations of a large U.S. exportable surplus. Ending stocks are projected to remain at 6.0 million bales, which would be the highest level since 2008/09,” the report said. “However, the ending stocks-to-use ratio is expected to fall slightly as U.S. exports and the U.S. share of world trade rise.”
China’s supply of cotton is expected to continue to pressure cotton prices in 2018/19.
The average price received by farmers is forecast to be between 58-68 cents per pound, according to USDA. The 2017/18 forecast was for 69 cents per pound.