Source: INTERNATIONAL COTTON ADVISORY COMMITTEE, 7/1/16

In 2015/16, world cotton production fell by 17% to 21.7 million tons, the lowest volume since 2003/04. Low international cotton prices at planting time led to a 9% contraction in area to 31.1 million hectares and the world average yield decreased by 9% to 699 kg/ha. However, while area is expected to contract by 1% to 31 million hectares in 2016/17, the average yield is projected to improve by 5% to 735 kg/ha, which would cause production to increase by 5% to 23 million tons. Cotton area in India is expected to expand by 1% to 12 million hectares in 2016/17, and production to increase by 8% to 6.3 million tons. Better monsoon weather may boost yield by 6% to 521 kg/ha, though pest pressure remains a concern. Cotton area in China is projected to decline by 10% to 3.1 million hectares due to high production costs and reduced government support, and production is forecast to decrease by 10% to 4.7 million tons. After contracting by 14% to 3.3 million hectares in 2015/16 due to less attractive cotton prices and overly wet soil conditions preventing planting in some areas, cotton area in the United States is expected to expand by 5% to 3.4 million hectares, and production could increase by 14% to 3.2 million tons. In 2015/16, Pakistan’s average yield declined by 32% to 528 kg/ha while production fell to 1.5 million tons as pink bollworm, which is hard to spot in the field, re-emerged as a significant pest. However, measures are being taken to help combat the pes, and as a result, yield is expected to partially recover by 25% to 662 kg/ha in 2016/17. Nevertheless, cotton area is likely to contract by 5% to 2.7 million hectares as farmers switch to competing crops with better returns, and production is projected to increase by 19% to 1.8 million tons. 

Global consumption is forecast to remain at 23.6 million tons in 2016/17 as low prices for competing fibers make cotton less attractive. Consumption in China is projected to decline by 5% decline to 6.8 million tons. However, mill use is likely to grow by 11% to 1.2 million tons in Vietnam and by 10% to 1.2 million tons in Bangladesh. Despite declining demand for imports of cotton yarn by China in 2015/16, mill use in India is expected to recover by 3% to 5.4 million tons and in Pakistan by 1% to 2.2 million tons.

While mill use remains stagnant in 2016/17, world cotton trade volume may increase by 1% to 7.4 million tons. China’s imports are expected to decrease by 8% to 947,000 tons as the Chinese government continues to restrict imports in order to reduce its sizeable stocks of cotton. However, imports outside of China are forecast to increase by 3% to 6.5 million tons. Given the larger exportable surplus available in the United States, exports are projected to increase by 18% to 2.3 million tons in 2016/17.  
World stocks at the end of 2016/17 are projected to decrease by 5% to 20.4 million tons as mill use exceeds production by 930,000 tons. Ending stocks in the rest of the world are forecast to rise by 3% to 8.7 million tons, though the stock-to-use ratio outside of China would be similar to the 36% registered last season.