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Low cotton prices expected to persist

Low cotton prices expected to persist

For the first time in five seasons, world cotton consumption is expected to surpass cotton production, but low prices will likely persist.

Low cotton prices persisting through the rest of 2014-15 are expected to result in a 6 percent decrease in world cotton area in 2015-16, according to a International Cotton Advisory Committee report. Cotton production is expected to fall by 6 percent, while consumption is expect to increase by 2 percent, marking the first time in five seasons that consumption may overtake production.

Click to view photos from 2015 NCC annual meeting
Click to view photos from 2015 NCC annual meeting

In 2015-16, cotton is likely to be much less attractive to plant due to falling cotton prices, while corn and soybean prices have recovered somewhat from price downturns last September and October.

Area in India is forecast down 5 percent. Assuming yield similar to the last few seasons, India is expected to be the largest producer of cotton in the world for the second consecutive season.

China’s cotton area is expected to fall for the fourth consecutive season. Area for 2015-16 is projected to fall by 10 percent and production by 11 percent. The latter would be the lowest level since 2003-04.

In the United States, uncertainty over returns in the new STAX program and low cotton prices relative to competing crops could result in a 10 percent decline in area and a 7 percent decline in production.

World cotton consumption is forecast to grow in 2015-16 due to a moderate improvement in global economic growth of 3.5 percent as forecast by the International Monetary Fund. However, prices for polyester have also fallen much faster than cotton prices for much of the season, eroding the price attractiveness of cotton.

World cotton trade is expected to rise 4 percent due to a partial recovery in consumption, particularly in countries that rely on imports in 2015-16.

 

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