Cotton prices worldwide may fall in the next few months for an increased supply following higher production and remaining stocks from last year, according to a report from the International Cotton Advisory Committee or ICAC. The ICAC forecasts that cotton prices will range between 66 cents and 83 cents per pound from the second half of the cotton season of 2016-17. The cotton season starts on August 1 and ends on July 31.Currently, cotton is trading between 73.8 cents and 74.8 cents per pound on international commodity exchanges. One bale equals 480 pounds or 218 kilograms.Bangladesh is forecast to increase its imports by 1 percent to 6.43 million bales, making it the largest importer in 2016-17. Vietnam’s imports are projected to rise 19 percent to just under 5.52 million bales, according to the ICAC.World cotton production in 2016-17 is projected to rise 8 percent to 104.72 million bales, which may put pressure on cotton prices in the latter half of the season, the ICAC said. The world’s ending stocks may fall by 7 percent to 82.68 million bales in 2016-17, though stocks outside China are expected to grow 6 percent to 39.96 million bales.The current season started with a large shrinkage in stocks, particularly from countries in the southern hemisphere, which saw ending stocks in 2015-16 fall 21 percent to 7.34 million bales, the lowest since 2009-10.The shortage in supply carried through the first few months of the 2016-17 season, as the bulk of the crop was still being harvested, keeping prices firm.With the exception of China, cotton production is projected to be higher in the top five producing countries. India’s cotton production is forecast to increase 4 percent to just under 27.56 million bales, making it the world’s largest producer, the ICAC said.Despite declining by 4 percent to 21.12 million bales, China would be the second largest producer in 2016-17.Production in the US could rise 28 percent to 16.53 million bales, while production in Pakistan will recover 20 percent to 8.27 million bales, as efforts to prevent the reemergence of pink bollworm have been effective.Additionally, cotton production in the southern hemisphere, primarily Brazil and Australia, is expected to rise 21 percent to 12.87 million bales, which could put pressure on prices through the end of 2016-17 to the start of the next season as both countries are also large exporters. Production in Brazil, the world’s fifth largest producer and largest in the southern hemisphere, is forecasted to increase by 10 percent to 6.43 million bales. Production in Australia could grow by 64 percent to 4.59 million bales due to expanded plantings as farmers were encouraged by high prices and better water availability. World cotton consumption is likely to remain stable at 110.69 million bales. While prices for polyester, the main competing fiber, have risen in recent weeks, they still remain well below international cotton prices, making it unlikely that cotton mills use will expand this season unless polyester prices continue to rise. China’s consumption is expected to remain stable at 33.98 million bales, making it the largest consumer. However, mill use in India is projected to decline by 1 percent to 23.88 million bales, while mill use in Pakistan is likely to remain stable at 10.56.Ongoing uncertainty in Turkey and competition from lower-priced cotton yarn imports could lead to a 3 percent decline in mill use to 6.66 million bales. However, cotton consumption is forecast to grow by 5 percent to 5.97 in Bangladesh and 13 percent to 5.05 million bales in Vietnam.Given that most large cotton-consuming countries depend at least in part on imported cotton, trends in consumption are mirrored in the top importing countries. Substantial increases in exports are likely in countries with larger exportable surpluses and strong demand in international markets, such the United States and Australia, which are expected to be the first and third largest exporters in 2016-17.
