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Pakistan Flooding, Texas Drought Devastate Global Cotton

Flooding and drought are having a crushing impact on the global cotton industry, the International Cotton Advisory Committee (ICAC) said in a new report.

The impact on the cotton crop will not be fully realized until the water subsides, but ICAC said sources on the ground are reporting a large reduction in the expected crop for the 2022-23 season. The ICAC is reducing the estimated production for Pakistan to 1 million tons from 1.5 million tons.

ICAC noted that the impacts of climate change are being felt in multiple major cotton-producing countries. The floods in Pakistan have killed nearly 1,200 people to date and more than 33 million people have been affected. The estimated economic costs are approaching $10 billion, the report said.

Pakistan remains the world’s fifth-largest producer of cotton, with 6 million bales produced last season and $3.4 billion worth of cotton exports in 2021, and roughly 6 percent of the global supply, according to United Nations Comtrade data. It’s also the second-largest producer of Better Cotton after India, feeding the sustainable cotton needs of major apparel brands such as Gap, H&M and Zara.

Pakistan’s monsoon rains have swept away some 70 percent of Better Cotton grown in the country, the world’s largest sustainable cotton program told Sourcing Journal. Better Cotton works with nearly 500,000 licensed farmers across 1 million hectares of Pakistan cropland.

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Better Cotton is still surveying the damage, but early estimates suggest that between 200,000 to 250,000 farmers have been affected by the unsparing deluge. One-third of the South Asian nation is currently underwater, the result of unprecedented rainfall coupled with glacier melt from an earlier heatwave.

Flooding and drought are having a crushing impact on the global cotton industry, the ICAC said.
This picture taken on Aug. 30 shows cotton crops damaged by flood waters at Sammu Khan Bhanbro village in Sukkur, Sindh province. Asif HASSAN/AFP via Getty Images

In the United States, the West Texas crop has been severely damaged by drought with an estimated loss of over 1 million tons compared with the previous season, ICAC said.

“This puts the current U.S. crop at just over 2.7 million tons, and while the West Texas region has received a good amount of rain in the past few weeks, the precipitation has come much too late to help the dry land cotton–and if bolls are open in irrigated fields, it could spell trouble for quality,” ICAC said.

The organization’s current price forecast of the season-average A index for 2022-23 ranges from 99 cents to $1.57, with a midpoint at $1.27 per pound. This is based on the ending stocks-to-mill use ratio in the world-less-China in 2020-21 and 2021-22 and the projection for 2022-23, as well as the ratio of Chinese net imports to world imports in the same periods.

U.S. spot cotton prices averaged $1.22 per pound for the week ended Aug. 25, on par from a week earlier, but up from 91.24 cents a year earlier, according to the Department of Agriculture.

“Globally, we will see continued volatility and potentially higher prices throughout the entire 2022-23 season,” ICAC added.