According to International Cotton Advisory Committee'a (ICAC) latest forecast, the price of the cotton which is right now at the lowest level in the international market since 2009, has led to an imbalance in the market. Low cotton prices are expected to persist through the rest of 2015 when farmers in the Northern Hemisphere make their planting decisions. Watching more premium than in the index futures, according to the report the price of cotton is around 67 cents and the prices which are at the lowest level of the last six years, will reduce the attractiveness of cotton production.
There will be a decrease in 6 percent
World cotton area in 2015/16 is projected down 6% to 31.6 million hectares. Assuming a world average yield of 777 kg/ha, world cotton production is forecast to fall 6% to 24.6 million tons, which is the lowest volume since 2009/10.
Polyester will balance the prices
On the other hand, world cotton consumption is expected to increase by 2% to 24.7 million tons, making 2015/16 the first time in five seasons where consumption overtakes production. However, prices for polyester have also fallen much faster than cotton prices for much of the season, eroding the price attractiveness of cotton. World cotton trade is expected to rise 4% todue to a partial recovery in consumption, particularly in countries that rely on imports. Even assuming reasonably lower production and higher consumption in the next few years, stocks held outside of China are forecast to rise by to nearly 9 million tons, the second largest volume after 2004/05 in the last 30 years.
Most hard fall will be in China
The Chinese cotton crop in 2015 could be its smallest in 12 years,with a reduction of 700,000 MT is anticipated by ICAC, taking China’s crop to 26.2 million bales. According to ICAC, in China, area is projected to fall for the fourth consecutive season by 10 percent to 3.8 million hectares. Due to sales of stocks in China, a decrease in imports are being experienced s well. China's cotton imports decreased by 45 percent in January. According to data released by the China Cotton Association, cotton imports in January was 161 thousand 200 tons. The first five months of the 2014-15 season, 722 thousand 600 tons, down 49 percent cotton imports occurred. Due to China's production falling repeatedly in the second season, it is expected to make India the largest producer of cotton for the second consecutive season. Although India's production will fall to 6.5 million tons with a decrease of 300 thousand tons, it is expected to receive a large amount of products than China. Area in the United States is expected to contract 10% to 3.6 million hectares, and production will decline 7% to 3.3 million tons. .Also Brazil’s production is forecast to fall by 10% to 1.5 million tons.
Cotton Harvest will Fall Back in The US
According to the recent US cotton producers planting trends survey made by National Cotton Council (NCC), US's cotton planting area may be less than 14.6 percent upon to a pre-season. According to the results of the survey, US's cotton plant area might decrease from 11 million hectares to 9.4 million hectares. Despite the very small decreases in the stocks of 2015/16, it is expected the US's stocks to remain high. However, as mentioned in the last couple of harvest years, the rainfall in West Texas and the volume of demand for imports in China may loosen by narrowing the US stocks. NCC calculated 2015/16 national harvest as 14.0 million bales by taking into state-based expected average yield of seed purchases and drop-out rates.If China's import is assumed to be limiting its import quota, it can be expected for the US exports to jam at a level close to the estimates made for the year (10.7 million bales). Despite the decrease this month, there has been new investments made on the US yarn in the industry and it can be expected to be horizontal or higher of US consumption in the coming crop year, probably between 3.7 and 4.0 million bales.
Turkey will receive 54 thousand bales of cotton
US Department of Agriculture (USDA), announced that 1 August 2014 /15 season of the net cotton export link in the January 2-8 week is 441 thousand 800 bales. The amount of net connection for next season in the same period was 500 thousand bales. According to a statement from the USDA, 54 thousand bales of cotton exports was made to Turkey. Connections of 184 thousand 500 bales with China, 127 thousand bales with Vietnam and 21 thousand 200 bales with Taiwan was made. According to this, China has placed an order three times more than Turkey, Taiwan 2 times more.
