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With (cotton) stocks rising and production outpacing consumption, recovery may be limited
Story Date: 9/2/2020
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Source: INTERNATIONAL COTTON ADVISORY COMMITTEE, 9/1/20
Executive Summary
Highlights from the September 2020 Cotton This Month include:
• Global recovery will be inconsistent due to countries’ varying abilities to deal with the pandemic
• Worldwide production is expected to decline to 25.1 million tonnes in 2020/21
• Global consumption is expected to increase to 24.3 million tonnes in 2020/21
• With rising stocks and continuing economic uncertainty, prices will remain under pressure for the near future
With Stocks Rising and Production Outpacing Consumption, Recovery May Be Limited
Although countries around the entire world were plunged into the pandemic almost simultaneously, they will recover at different speeds, based on their ability to contain the virus and restart their economies. The recovery will also be hampered by rising stocks, which will swell even further given that global production (25.1 million tonnes) is expected to outpace consumption, even though it is projected to increase by 7.2% to 24.3 million tonnes, in 2020/21.
There are some positive signs to feel optimistic about — spinning mills in Vietnam, Bangladesh and India were up to 75% capacity in July, for example — but at the current stocks-to-use ratio of 0.97, there’s currently enough cotton in the world’s warehouses right now to meet consumption needs for nearly a full year.
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