Industry Observation: Cotton Planting Area Is Expected To Decline In Many Countries Around The World

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A cotton research organization said that the United States Department of Agriculture (USDA) released preliminary forecast data for 2023/24 at its annual cotton outlook forum at the end of February. The predicted global cotton output in the next year will not change much (100000 bales, from 115.1 million bales in 2022/23 to 115 million bales in 2023/24). Although the current cotton price is still higher than its historical average, it does not compete with the price increase of corn and soybeans. Therefore, the cotton planting area is expected to decline in many countries, including China, India, the United States, Turkey and West Africa.

However, due to the influence of weather and pests, the harvest area in 2022/23 cannot be equal to the planting area. Due to the decrease of planting area, it is assumed that the weather conditions of the United States (drought), Pakistan (flood), Australia (flood), West Africa (pest) and other countries suffering from severe weather in 2022/23 will return to the average level in 2023/24, which is the main condition for forecasting the increase of global cotton production in 2023/24.

Since the outbreak of COVID-19, the global market demand has been leading the cotton supply and demand balance. USDA predicts that the global cotton consumption in 2023/24 will increase significantly (5.4 million bales, to 115.5 million bales). The precondition for this forecast is that the high inventory in the cotton supply chain has been consumed and the order volume has begun to rebound.

Based on the above forecast and the current forecast of the ending inventory of 2022/23, the ending inventory of 2023/24 was slightly reduced (- 500000 packages, to 89.6 million packages). Except for several special years of 2019/20 and 2012/13-2015/16, it is currently predicted that the inventory at the end of 2023/24 will reach a record high.

At present, it is far from the next cotton year, and the probability of these forecast data being significantly revised is still very high. The uncertainty of 2022/23 is higher than usual.

The trend of global economy # is not clear. The latest data shows that inflation has not been resolved, which may mean that interest rates will rise. At the same time, the labor market has been proved to be resilient. Consumers still have savings from government subsidies, and the new crown is no longer a serious threat.

Geopolitics # development is unknown, but will have an impact. The weather has changed a lot in recent years. Meteorological experts said that La Nina phenomenon may be transitioning to El Nino phenomenon. El Nino will bring weather reversals to many regions (including West Texas) under the current La Nina phenomenon. Any change in weather patterns will affect crop yields.