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Cotton to Suffer 11.8% Drop-off in Global Consumption

Cotton consumption is projected to decline 11.8 percent in the 2019-2020 season, according to the International Cotton Advisory Committee’s (ICAC) monthly report.

ICAC also forecast a 4 percent decrease in planted land in 2020-21 and a 4 percent falloff in production in the same period, all caused by the economic downturn from the coronavirus pandemic.

The year-end price projection for 2019-20 has been revised down to 71.4 cents per pound, and the projected year-end average of the 2020-21 “A Index,” an average of global prices, is 56.9 cents a pound.

U.S. spot cotton prices averaged 51.42 cents per pound for the week ended April 30, according to the U.S. Department of Agriculture. That was up from 49.75 cents the previous week, but down from 71.23 cents a year earlier.

USDA reported spot transactions for the week of 27,359 bales compared to 18,459 reported the prior week and 32,665 spot transactions reported the corresponding week a year earlier. Total spot transactions for the season to date were 1.45 million bales compared to 1.14 million bales for the comparable week in 2019. The ICE July futures settlement price ended the week at 57.33 cents, compared to 56.37 cents the previous week.

“With the global economy paralyzed and supply chains shattered, current projections show an 11.8 percent decline in cotton consumption, reducing global trade to 8.26 million tons in 2019-20,” ICAC said in its report. “While there is hope for a vaccine or cure, or that warmer weather in the Northern Hemisphere will minimize Covid’s impact, there can be no real economic recovery unless there is a health recovery first. Whether or not we sink into a worldwide depression…with unemployment reaching as high as 33 percent, will be determined by the effectiveness of government policies.”

In 2020-21, global area is projected to decline 4 percent to 33 million hectares, with India remaining the world leader despite a decline in plantings. ICAC said production is set to decline by a comparable amount to 25 million tons.