High cotton prices–averaging 84.63 cents per pound so far this season–are expected to impact planting decisions and area expansion for the 2018-19 season, the International Cotton Advisory Committee (ICAC) said in a new report.
U.S. spot cotton prices averaged 80.07 cents per pound for the week ended April 26, which was up from 79.22 cents per pound the prior week and from 76.10 cents per pound in the year-ago period, according to the U.S. Department of Agriculture. The Cotlook A index, an average of global prices, stood at 93 cents per pound on Wednesday, while ICE futures prices opened at 85.33 cents.
Import tariffs remain a potential concern in the global cotton trade, ICAC said. China has threatened to impose 25 percent tariffs on imported U.S. cotton in retaliation to threats by President Trump to impose tariffs on a range of Chinese goods imported into the U.S.
ICAC said world area under cotton has averaged 32.4 million hectares over the last 10 years and is projected to grow moderately during the next season. New support policies for cotton in the U.S. were passed in February, it noted, and planted cotton area is expected to increase 11 percent in 2018-19 season in the U.S. to 5.08 million hectares. But the report warned that drought conditions remain a concern for the cotton area in West Texas, which represents about 25 percent of U.S. production.
Planted area in India is expected to fall to 11.9 million hectares next season from 12.3 million hectares estimated for the current season, while planted area in China is forecast to remain stable based on the continuation of Chinese market support policies. World cotton consumption is projected to continue to grow steadily through 2018-19 to a projected 26.7 million tons from 25.5 million tons estimated in in the current 2017-18 season.
Global imports are seen increasing among top countries. Imports by China are projected to increase for the fourth consecutive year to 1.5 million tons, but Bangladesh remains the leading global cotton importer. The Chinese reserve auction to sell cotton stocks this year began in March and should continue through September, so far releasing 30,000 tons per day for sale, ICAC noted.
Daily sales through April have sold 100 percent of high quality Xinjiang quantities available, while lower grades have sold at 25 percent of available quantity.
Despite lowered projections for 2017-18, the U.S. remains the leading global exporter and will likely remain so in the 2018-19 season, with exports projected at 3.5 million tons.