Global Cotton Production More Than Needed Cotton Prices Will Fall Sharply In 2019/20

According to the preliminary forecast of the US Department of agriculture's Outlook Forum, global cotton production exceeded demand in 2019/20, and the final inventory increased by 1 million packs.

Global production is expected to grow by 6.8%, and yields in many countries have rebounded and planting area has increased.

Global consumption will continue to increase, but the growth rate is slightly lower than the long-term average.

China will gradually expand its import volume.

The A index is expected to be 80 cents / pound, down 5 cents over the same period, due to increased inventories outside China.

The US cotton production in 2019/20 is expected to increase to 22 million 500 thousand packs due to the increase in the actual area and the drop in yield.

Domestic cotton consumption in the United States is slightly higher than the current year, and exports are expected to increase, but ending stocks are rising.

Global production

In 2019/20, the world's cotton production is expected to reach 126 million 500 thousand packs, up 6.9% from the same period last year, the highest second in history, only 0.6% less than the 127 million 200 thousand package in 2011/12.

Cotton harvest area is expected to grow by 4% over the same period last year, to 34 million 500 thousand hectares.

Among all cotton producing countries, the United States has the largest increase in production, an increase of more than 4 million packages, an increase of 22.3%. China's output is expected to increase by 500 thousand packs, an increase of 2%, reaching 28 million packs, and the cotton planting area in Xinjiang has increased slightly, but it has been partly offset by the reduction in the mainland area.

The reason for the increase of cotton production in China is that the cotton yield per unit area in Xinjiang has returned to the normal level of history, and the proportion of high-yield areas in the whole country has continued to expand.

India's output is expected to be 28 million 500 thousand packs, and Brazil's output is expected to increase by 600 thousand packs, and Australian production is expected to remain unchanged.

Global consumption

In 2019/20, global cotton consumption is expected to continue to grow by 1.5% to 125 million 500 thousand packages.

China's consumption growth rate of 2% is slightly higher than the global average growth rate, and the cotton consumption is 41 million 300 thousand packs.

The growth rate of consumption in other parts of the world is slightly lower than that in China. The situation in Southeast Asia is not very consistent. Vietnam's growth rate is above average. However, the growth of Indonesia and Thailand is low or stagnant, while the growth rate outside South Asia and Bangladesh is below average, and Bangladesh continues to be above average.

In addition, the price ratio of cotton and chemical fiber will continue to be stable in 2019/20, and will also help increase cotton consumption.

Global import and price

Global cotton imports in 2019/20 are projected to be 45 million packs, a slight increase compared to the same period last year, and the volume of imports from China, Vietnam and Bangladesh is expected to increase.

As supplies increase outside China, inventories will also rise.

The average value of the A index is 80 cents, down 5 cents from the same period last year.

U.S.A

2019/20 cotton area is 14 million 300 thousand acres, an increase of 150 thousand acres over the same period, the highest level since 2011/12.

The US cotton yield is 9% and the harvest area is expected to be 12 million 900 thousand acres.

According to this calculation, the yield of US cotton was 22 million 500 thousand packs in 2019/20, and the weather and soil conditions in the US Delta and southeastern regions were good, and the dry weather in Southwest Texas was dry.

In 2019/20, US cotton exports amounted to 17 million bales, due to the increase in US cotton production and global consumption. The domestic consumption of the United States was 3 million 300 thousand packs and the final inventory was 6 million 300 thousand packs, an increase of 2 million packages compared to the same period last year.

Cotton prices will be under pressure in 2019/20.