Global Cotton stocks forecast to fall 10% in 2018-19
Commodity Online | September 05 2018
UPDATED 18:06:53 IST

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The 2018/19 season is projected to see a 3% decrease in production, a 3% increase in consumption, and a 10% drop in global stocks, which would bring the world’s cotton reserves down to a level not seen since the 2011/12 season, the International Cotton Advisory Committee (ICAC) said in its latest report.

The global stocks-to-use ratio is expected to drop to about seven months of mill use (0.61), the report said.

The decrease in global stocks will largely come from a drawdown in China’s warehouses. From March through August 2018, the Chinese State Reserve sold more than 2 million tonnes of fibre, reducing stocks to about 8.6 million tonnes.

If production and consumption remain at current projected levels, the 2018/19 season is expected to further reduce stocks in China to 6.6 million tonnes, reflecting a 23% decline, ICAC said.

Stocks outside of China are trending in the opposite direction, increasing 24% in 2017/18 to 10.1 million tonnes. The increase is expected to slow in 2018/19, ticking upward to 10.2 million tonnes. By the end of the coming season, warehouses outside of China are expected to house about 61% of the world’s global reserves.

Ending stocks in China reflect growing mill use in China and may signal the possibility of increased imports in 2018/19. Growing global demand in 2018/19, despite uncertainty about trade policies, may lead to price increases amidst a possible global production decrease, the report said.

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