With global consumption expected to climb and production dipping, the International Cotton Advisory Committee (ICAC) has lowered its 2018-19 price forecast for cotton to 86.45 cents per pound, down from 89 cents in December.
The forecast, which has a price range from a low of 75.60 cents to a high of 100.21 cents, is based on outlooks such as world cotton consumption, which grew 9 percent to 26.8 million tons last year, in 2017/18, dipping to 26.7 million tons in the coming year.
The Cotlook A Index, an average of global cotton prices, is projected at 89 cents for this year, one cent higher than last year’s average 88 cent per pound average. Spot prices on U.S. cotton averaged 73.12 cents per pound for the week ending Dec. 20, down from 75.37 cents per pound the prior week and 73.81 cents per pound a year earlier, according to the U.S. Department of Agriculture (USDA).
“The tariffs imposed in the much-publicized trade war between the USA and China are not expected to influence consumption directly, although they could affect textile demand if they have a slowing effect on economic growth,” ICAC said.
At the same time, ICAC projected that global cotton production will decline 2 percent to 26.1 million tons this year, marking the first drop since 2015-2016. It follows increases of 7 percent and 16 percent, respectively, the past two seasons.
According to the USDA, China, Brazil, West Africa, Turkey and Uzbekistan are expected to increase production. But it will be outweighed by expected decreases in the U.S., India, Australia and Pakistan.
Global stocks are expected to be down to 18.2 million tons this year from 18.8 million tons in the prior season, primarily based on major stock drawdown in China, where the projected 7.6 million tons in reserve would be the country’s lowest levels since 2011-12. The world outside of China is expected to post a small gain in stocks to 18.2 million tons.