Global Cotton Market to See Modest Growth in Coming Years19 Jul 2018 • by Natalie Aster
LONDON – Cotton is the most extensively-used natural fiber in the world. It is commercially used in different forms: fiber, cottonseed, and cottonseed oil. About 64% of the cotton produced globally is used for apparel manufacturing, 28% goes for home furnishing, and the remaining 8% is used for various industrial purposes. Meantime, cottonseed has a range of applications in the animal feed industry, whilst cottonseed oil finds application in the food industry.
The world’s cotton consumption is set to see a modest increase (a CAGR of appr. 2%) this year and exceed the production for the 3rd consecutive season. Therefore, the global cotton stocks are poised to decline by nearly 5,4 million bales in 2018. In the short-run, the world’s consumption of cotton is likely to grow at a higher rate than production, thus bringing the world’s stocks down.
The world’s cotton mill use will likely keep on expanding and reach around 115.8 million bales by 2018-end (the highest figure since 2010). A sluggish increase of the global GDP during 2017-2018 is fueling mill use in the majority of countries. China, India, and Pakistan hold the leading positions in terms of mill use and are anticipated to capture a combined 62% share of the world’s total mill use.
The global cotton production exhibited a downward trend during 2011-2015 and decreased from around 127.6 million bales in 2011 to slightly over 98.14 million bales in 2015. However, since 2015, the world’s cotton production shifted to an upward trend and exhibited sustainable growth during 2016-2017. Last year, the global cotton production recovered by appr. 11% and climbed to nearly 120.86 million bales; this is majorly attributed to improved yields coupled with the increased cotton planted area. Recovery in the global cotton production is slated to continue in the short run, however, at a lower rate.
World cotton production volume during 2005-2017 (in million bales)
India, China, and the US are now ranked as the top three cotton-producing countries across the globe. Last year, India’s cotton production volume exceeded 6.2 million metric tons, and the country grabbed the bulk share of the global cotton production volume. China produced over 5.98 million metric tons in 2017 and took the second spot in the world’s arena. The third position was held by the US with the cotton production volume of more than 4.55 million metric tons. Top three cotton-producing countries by far outpace other important cotton producers, for example, Brazil – the 4th biggest cotton producer, reported the production volume of slightly over 1.89 million metric tons last year.
Top global cotton producers, 2017 (in million metric tons)
Asia-Pacific takes lead in the global cotton production but the major share of the cotton produced in the region is consumed domestically. For instance, in India, most of the cotton produced in the country go for the needs of the domestic textile sector. China also domestically consumes the biggest portion of the country’s total cotton output volume.
In 2016, the world’s cotton exports registered a 6.4% YoY decline and totaled around USD 52.77 billion. This marketing year, the global cotton trade is poised to reach 38.2 million bales. In the years ahead, the world’s cotton trade is slated to continue rising but at a slower pace compared to previous years, encouraged majorly by the strong demand from the major import-depending countries.
The US is the leading cotton exporter in the world. In 2017, the country’s share in the world’s total export volume was almost 36%, which is equal to 3.37 million metric tons. This year, the US cotton exports are expected to witness a slight decline despite a much larger crop.
Top global cotton-exporting countries, 2017 (in thousand metric tons)
India is the second largest exporter of cotton globally. The country’s exports are also likely to decrease this crop year, however falling imports are anticipated to more than offset lower exports. In 2017, India exported around 0.98 million metric tons of cotton.
Large carry-in-stocks in such countries as Australia and Brazil, owing to much higher crops in CY 2017, have led to considerably higher export volumes from these countries in 2017. Last year, Brazil took the third spot on the list of the world’s biggest cotton exporters, whilst Australia was the fourth largest exporter.
As for imports, Vietnam is the biggest cotton-importing country. It is followed by China, Turkey, Indonesia, and Bangladesh.
After a sharp decline in 2012, the world’s average prices of cotton remained volatile and exhibited a declining trend through 2015. However, the situation improved in 2016, and the global average cotton price increased during 2016-2017. Last year, the world’s average cotton price settled at 85.56 US cents per pound.
Global average cotton price during 2005-2017 (in US cents per pound)
This year, the international cotton prices are supposed to reach a five-year high. However, although the global cotton prices have improved, cottonseed prices have declined considerably, thus resulting in an upturn in net ginning costs. Many manufacturers will continue to face difficult economic situation this year. Production costs will remain rather high, and unless producers receive good yields, current prices may not be enough to defray all the production expenses.
Cotton markets in the major producing countries are predicted to stabilize in the coming years due to the continued government support. Cotton prices are likely to remain relatively stable in the coming years, although they are always under pressure given high stock levels along with fierce competition from synthetic fibres.
© MarketPublishers.com, 2018
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