INSIGHTS
The 2023-24 forecast indicates a downturn in the global cotton industry with production dropping to 112.4 million bales due to reductions in key regions.
Consumption is reduced to 115.9 million bales, affected by decreased supplies in major markets including India and China.
Furthermore, US exports are anticipated to hit an 8-year low at 12.3 million bales.
Production is witnessing a downturn for the second straight month, now standing at 112.4 million bales, a sharp drop of over 4.4 million bales compared to forecasts from two months prior. This decline is attributed to decreased outputs across numerous regions including West Africa, the United States, Greece, Mexico, and India, which have overshadowed the rise in production seen in Brazil.
On the consumption front, a reduction of 1.1 million bales brings the forecast down to 115.9 million, primarily due to diminishing supplies in major consuming nations such as India and China. Although consumption is anticipated to be 5 million bales higher than the previous year, it represents a more restrained growth, stemming from depleted resources and economic instability which are affecting usage rates, as per the report.
Global trade projections have also been corrected downwards by approximately 600,000 bales to 43.3 million, in light of the reduced consumption in major importing countries, notably Bangladesh and Vietnam.
The US is not exempt from the downturn with export predictions showing a decline to a worrying 8-year low at 12.3 million bales, a consequence of slightly dwindling supplies. Moreover, the global ending stocks are poised to decrease by over 1.6 million bales, reaching 90.0 million bales, a situation exacerbated by reduced initial stocks and production outweighing the downward consumption revision.
In the midst of this landscape, the US season average farm price for the 2022-23 period is expected to experience a minor increase, going up by 1 cent to stand at 80 cents per pound.
