The International Cotton Advisory Committee’s (ICAC) February update of cotton conditions is projecting that the global cotton trade will grow 2 percent in the 2019-20 season, reaching 9.4 million tons and foretelling stable prices.
China should remain the world’s top importer at 1.8 million tons, but that would represent a year-over-year decline of 14 percent, ICAC said.
Production is expected to decline in some major producing countries, with Turkey revised downward to 815,000 tons and Pakistan to 1.35 million tons. As a result, imports will increase for both countries to 818,000 tons and 967,000 tons, respectively, ICAC said.
Latin American countries should meet some of that additional demand. Brazil’s production is expected to remain high at 2.76 million tons and exports are expected to grow 19 percent to 1.7 million tons. Argentina is also forecast to increase its production, to 358,000 tons, posting a gain of 39 percent, while imports are expected to increase by 57 percent to 186,000 tons.
The latest U.S. Department of Agriculture (USDA) report forecast U.S. production to be 20.1 million bales in the current season compared to 18.4 million bales in 2018-2019.
USDA expects U.S. exports to be unchanged at 16.5 million bales for the season, which represents the second-highest volume on record. Stability in the export forecast caused each of the four consecutive decreases in the U.S. production forecast, representing a decrease of 2.3 million bales since August, to result in four parallel decreases in ending stocks.
The current projected increase in U.S. ending stocks of 11 percent, or 550,000 bales, has dropped from a forecast 48 percent gain to 2.4 million bales in August.
“At current estimates of production and consumption, cotton prices should make modest gains through the end of the season,” ICAC said.
The group’s current price projection for the year-end average of the Cotlook A Index, an average of global cotton pieces, has been revised to 80 cents per pound. On Tuesday, the Cotlook A index stood at 76.65 cents per pound. U.S. spot cotton prices averaged 65.21 cents per pound for the week ended Jan. 30. That was down from 65.95 the prior week and from 69.81 cents a year earlier.