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ICAC: Record Chinese imports boost world cotton trade

ICAC: Record Chinese imports boost world cotton trade

The International Cotton Advisory Committee says world cotton shipments are expected to increase in 2012-13 because of more buying by China. World cotton consumption is also expected to rise after two years of declines. But world cotton stocks are also expected to be higher because production will exceed consumption.  

Global cotton trade is expected to rise by 13 percent to 39.5 million bales in 2011-12, driven by record imports from China. Imports by the rest of the world are projected to fall by 18 percent to 19.3 million bales. China will account for 52 percent of global imports this season.

The surge in Chinese imports has reduced the amount of cotton available in the rest of the world this season, the International Cotton Advisory Committee said in its monthly update on the world cotton situation. (The ICAC is an organization representing the 44 cotton-producing and consuming countries.)

U.S. exports are dropping by 21 percent to 11.48 million bales due to reduced supplies, but shipments from India, Brazil and Australia could reach record levels. As a result, while stocks in China are expected to more than double to 22.96 million bales in 2011-12, stocks in the rest of the world will increase at a more moderate rate of 14 percent to 37.2 million bales.

Cotton plantings for 2012-13 (Aug. 1-July 31, 2013) are now progressing in the Northern Hemisphere. World cotton area is expected to decrease by 7 percent to 83 million acres in response to lower prices, improving attractiveness of grains and soybeans, and rising agricultural production costs.

Based on average yields, world production could decline by 7 percent to 115.74 million bales. The decline in production will be driven by China, expected to produce a crop of 29.39 million bales or 13 percent lower than in 2011-12. Production is also expected to decline in India, Pakistan, Brazil and Turkey. U.S. production could rise by 11 percent to 17.45 million bales despite reduced plantings, assuming improved weather and lower abandonment than in 2011-12.

After two seasons of decline, global cotton mill use is projected to increase by 4 percent to 110.69 million bales in 2012-13, driven by improving economic growth and lower cotton prices. With global production exceeding global consumption again, global stocks are expected to continue increasing by 9 percent to 65.68 million bales, or 59 percent of world mill use.

The projected accumulation of cotton stocks will weigh on international cotton prices in 2012-13, but the extent of this downward pressure will depend in large part on how the Chinese national reserve is handled. 

TAGS: Cotton
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