Cotton Inventory Continues To Decline, Consumption Recovery Remains Variable

The International Cotton Advisory Committee (ICAC) released the global production and demand forecast in April that the global cotton supply is tightening, but the current recovery of cotton consumption is facing uncertain factors.

In 2020 / 21, with the recovery of textile production and the promotion of vaccine injection, global cotton consumption is expected to increase by 8% to 24.5 million tons, 8.1 million tons in China, 5.45 million tons in India, 2 million tons in Pakistan, 1.5 million tons in Turkey and Vietnam, and 1.4 million tons in Bangladesh. At present, vaccination is not balanced among countries. Only 6% of the world's population has been vaccinated, and many countries have not been vaccinated. Therefore, the recovery of cotton consumption is still uncertain.

In 2020 / 21, the global cotton production is expected to be 24.1 million tons, a decrease of 100000 tons compared with the previous forecast, while the consumption volume slightly increased on a month on month basis, the gap between supply and demand has expanded, and the inventory at the end of the period continues to decline. At the end of the period, China's inventory remained stable at nearly 9 million tons, while the inventory outside China was reduced to 12 million tons this month, lower than the level of last year.

Since the beginning of the year, the decline of global production and the increase of consumption led to the decline of final inventory, which provided support for cotton prices. After reaching a peak at the end of February, international cotton prices fell sharply in March due to the expected increase in production next year and uncertain consumption growth. Australia's production is expected to increase, while tensions between Australia and China will affect cotton trade between the two countries. Trade relations between India and Pakistan are gradually easing, and India's export volume will increase this year. This month, global cotton trade rose to 9.5 million tons.

The ICAC estimates that the average value of the cautruk a index in 2020 / 21 will be 78.5 cents / pound, and that in 2021 / 22 will be 83 cents / pound.