World ending stocks for cotton are forecast down for the sixth consecutive year on record consumption, the U.S. Department of Agriculture (USDA) said in its first detailed forecast for the 2019/20 marketing year.
However, stocks outside of China will grow after declining in 2018/19 and reach a record of nearly 45 million bales, it said in its latest World Agriculture Supply and Demand Estimates (WASDE) report.
Global consumption is forecast to grow to a record of just under 126 million bales, and world consumption will have gained 16 million bales since the low following the 2009 global financial crisis.
“Growth is slightly above the long-term average and is expected in all of the top ten spinning countries except Indonesia, with continued strong growth forecast for Vietnam and Bangladesh. Consumption in China is expected up at near the world pace,” the report pointed out.
With global harvested area for cotton projected at its highest in 7 years, and yields rebounding in major producing countries, production is expected to rise 7.0 million bales to a near-record 125.5 million.
U.S. production is expected to rise the most, closely followed by India, while lower crops are foreseen for Australia and Brazil, and China’s crop is projected unchanged.
In 2019/20, for the fourth consecutive year world trade is expected to expand. Both the United States and Brazil will have large exportable supplies: a record late harvested 2018/19 Brazilan crop, which will be followed shortly on the market by the sharply higher 2019/20 U.S. crop.
The expanded world trade will be driven by higher use in importing countries. Vietnam and Bangladesh imports will continue commensurate with their expansion in spinning. China’s imports are nearly 30 percent higher as a shift in its State Reserve policy – from reducing to rotating reserves – is bringing China back strongly into the global market, the report added.