While global cotton production is expected to outpace consumption (25.7 million tons versus 25.4 million tons) in the 2017-18 crop year, strong textile demand in emerging markets will benefit cotton in the long term, the International Cotton Advisory Committee said in a new forecast.
“If developments continue as expected, the short-term outlook for cotton is a positive one,” ICAC said. “Consumption, which has steadily increased over the last three seasons, is expected to continue rising, with increases of 3.6% and 4.4% projected in 2017-18 and 2018-19, respectively.”
Additional factors working to lift cotton are the rising production costs for synthetic fibers and growing awareness of the environmental damage being caused by microfiber pollution, according to ICAC.
There’s a growing movement surrounding microplastics pollution, with particles ending from washing polyester winding up in the world’s waterways. Those particles are said to have the potential to poison the food chain, as the tiny beads of plastic have wound up in the stomachs of marine life, as well as in the drinking water supply.
The cost of energy is always a key factor in producing synthetic fibers. According to the U.S. Bureau of Labor Statistics, the Consumer Price index for energy increased 0.1% in February following a 3 percent rise in January, with the electricity index rising 0.4% in the month.
The generally upbeat cotton forecast said the threat of pests and inclement weather remain concerns, however.
“This season, the world’s largest producer, India, suffered yield losses due to a pink bollworm infestation and is expected to decrease to 12 million hectares in planted area in 2018-19,” ICAC said. “Planting intentions for the world’s largest exporter, the USA, reflect an increase to 4.9 million hectares in 2018-19, but drought conditions will need to be monitored closely, both in the USA and in Australia.”
ICAC projected that the Cotlook A Index price for cotton, representing the level of offering prices on the international raw cotton market, would end the 2017-18 season at 84 cents per pound. The Cotlook A Index ended last week at 89.95 cents per pound.
The U.S. Department of Agriculture’s weekly assessment of domestic cotton prices showed spot quotations averaged 78.34 cents per pound for the week ended March 29. That was down from 79.19 a week earlier, but up from 73.80 cents reported the corresponding period a year ago.
The ICE May settlement futures prices ended the week at 81.46 cents per pound compared to 82.15 cents a week earlier, USDA reported.