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Steady consumption, declining production will draw down stocks
Story Date: 2/4/2019
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Source: INTERNATIONAL COTTON ADVISORY COMMITTEE, 2/1/19
Executive Summary
Highlights from the February edition of Cotton This Month regarding the 2018/19 season:
• World ending stocks are projected to decrease by 5% to 17.6 million tonnes
• China’s production is expected to increase by 1%, bringing its total to 5.94 million tonnes, replacing India as the world’s largest producer
• Global consumption projections remain at 26.8 million tonnes
• Prices are feeling some pressure due to concerns about overall economic growth but should remain steady due to solid fundamentals
Steady Consumption, Declining Production Will Draw Down Stocks
By the conclusion of the 2018/19 season, world stocks are projected to drop to 17.6 million tonnes, reflecting a decrease of 5% from the prior year and registering the fourth straight year of decline. Consumption is expected to remain steady but a 3% decline in global production will draw down the world’s warehouses.
Production in China is expected to increase 1% to 5.94 million tonnes, and when combined with a 7% decline in India’s production due to insufficient rainfall, the changes mean China will regain the 'top producer’ title it lost to India in the 2015/16 season.
Although cotton prices have come under pressure, current projections for global consumption are unchanged at 26.8 million tonnes, with production projected to be slightly lower at 25.9 million tonnes. In the opinion of the Secretariat, cotton prices are feeling the effects of uncertainty related to the global economic environment, as opposed to the impact of trade barriers. Price fundamentals still look solid, as reflected in the price forecast.
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