Cotton global stocks shrinking: ICAC

Production and consumption falling due to competition from polyester fiber which is significantly cheaper

Global stocks of cotton are projected to decrease in 2015-16 (July-June) for the first time since 2009-10, by eight per cent over the year before, stated the International Cotton Advisory Committee (ICAC) in a report issued on Wednesday. This estimated fall is due to less output (global production is down 15 per cent, to 22.2 million tonnes) and is also not supported by demand, which is falling. ICAC has given two reasons for falling demand. One is lower prices of polyester, the alternative fibre, significantly down with the sharp fall in the price of crude oil. Many users, including in China, the world’s biggest cotton consumer, have shifted to that man-made fibre. The price of polyester staple fibre price has fallen by a third in two years.

Second, China’s demand for cotton is falling, as noted earlier. China's closing stock, says ICAC, is forecast to decrease by seven per cent to 12 mt. Ending stocks for the rest of the world are expected to decline by nine per cent, to 8.4 mt.

Read more from our special coverage on "COTTON"

• Cotton farmers plan march over non-payment of dues
• Haryana, Punjab may cut Bt cotton sowing

World consumption is projected to decrease by two per cent, to 23.9 mt. Consumption in China has declined continuously since 2009/10, when it was just over 10 mt. In 2015/16, consumption in China is forecast at 7.1 mt, down five per cent from the previous season. India’s consumption is expected to decline by two per cent, to 5.3 mt.

Vietnam is emerging as beneficiary of increase in cotton consumption which may increase by 22 per cent to 1.1 million tonnes in 2015-16 as China continues to invest in spinning mills there. China is cutting spinning locally and thinking of selling cotton from reserves. However mills there have moved to Vietnam which has better and flexible eco system.

Bangladesh's mill use is forecast to expand by 13 per cent to 1.1 million tonnes. In 2016-17, ICAC project, world cotton consumption to remain stable as modest growth in the top consumers outside of China offsets the decline in China's cotton consumption.

India's cotton production fell by 7 per cent to just under 6 million tonnes. World cotton production is projected to increase by 3 per cent to 23 million tonnes in 2016-17.