Washington DC, United States - The volume of cotton traded internationally is expected to decline by 8% to 8.1 million tons in 2014/15, which would be the second season in which international cotton trade declined. In 2013/14, the volume of cotton traded fell by 12% to 8.8 million tons. The decline is driven by the reduced shipments to China from a record of 5.3 million tons in 2011/12 to an anticipated 2.1 million tons 2014/15. In contrast, shipments to other countries are forecast to increase to nearly 6 million tons in 2014/15. Most of these shipments are going to other parts of Asia as the spinning industry has shifted away from China to other countries in the region. Much of this shift in consumption and trade occurred because of the changes in China’s cotton policy. In 2011/12, China implemented its policy of buying domestic and imported cotton for its national reserve and consequently became a large importer of cotton. Since 2011/12, the price of cotton in China has been significantly higher than international prices. This in turn hurt China’s spinning industry, but helped the spinning industry in other countries, such as India, Pakistan, Bangladesh, Indonesia, and Vietnam. In 2012/13, the season after China’s implementation of its new cotton policy, India’s consumption grew by 12% to 4.8 million tons and is expected to grow by 7% to 5.4 million tons in 2014/15. Similarly, Pakistan’s consumption grew by 9% to 2.4 million tons in 2012/13 and is forecast to grow by 3% to 2.6 million tons in 2014/15. Bangladesh, Indonesia, and Vietnam also experienced similar growth in 2012/13 in consumption and should continue growing in 2014/15, though at a slower rate.
In contrast, China’s consumption fell by 4% in 2012/13 to 8.3 million tons and is expected to fall by 1% in 2014/15 to 7.8 million tons. In 2014/15, China’s share of world cotton mill use would be 32%, down from 34% in 2013/14 and its record of 41% in 2007/08.
While the increased volume of trade benefited many exporting countries and farmers, it did not reflect improved demand for cotton. In 2011/12 when imports increased by 26% to 9.8 million tons, world consumption decreased by 7% to 22.8 million tons, the smallest consumption since 2003/04. While world consumption is forecast to increase by 3% to 24.2 million tons in 2014/15, it remains below the level seen in the seven years before international cotton prices spiked. Although the rebound in world consumption in 2014/15 is likely to cause larger imports by some consuming countries,this will not be enough to offset the drop in Chinese imports.
While China’s imports are expected to decline by 30% in 2014/15 to 2.1 million tons, its share of all imports would be
27%. Imports to Bangladesh, Indonesia and Vietnam combined will be slightly larger than China, reaching 2.4 milliontons, an increase of 1% from 2013/14. However, imports by Turkey, the fifth largest importer, are expected to decrease by 9% in 2014/15.
In 2014/15, exports from Greece and the CFA zone are forecast to rise by 6% and 3%, respectively due to increases
in production. However, exports from other large producing countries are expected to decrease in 2014/15. Because China was a main destination for exports of cotton from the United States and Australia, their exports are anticipated to fall next season as they look for new markets. The United States’ exports are expected to decrease by 1% to 2.26 million tons while Australia’s exports are expected to decrease by 23% to about 800,000 tons. Additionally, India, the second largest exporter could see a decrease of 21% to 1.1 million tons in 2014/15 as more of its cotton is consumed domestically.World 2014/15 cotton production is forecast at 25.2 million tons, down by 2% from this season, as the weather is anticipated to be less favorable than in 2013/14 for many of the large producing countries, causing yields to be lower in 2014/15. Additionally, it is likely that India will overtake China as the largest producer in 2014/15. However, this is more due to China’s significant decrease in area rather than a large gain in India’s production next season. In 2014/15, India is expected to produce 6.3 million tons, a decrease of 2% from 2013/14 while China is expected to produce 6 million tons, a decrease of 10%.
World ending stocks are forecast to increase by 12% in 2013/14 to 20 million tons, and then to expand by another 5% in 2014/15 to 20.1 million tons. Additionally, ending stocks outside of China are expected to increase by 7% to 9.1 million tons in 2014/15 as China will be importing less of the surplus production than in the last 2 seasons. The projected accumulation of cotton stocks will weigh on international cotton prices in 2014/15, particularly as more stocks will be held outside of China.
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Source: International Cotton Advisory Committee (ICAC)