ICAC: India Forecast To Remain Largest Producer for 2017/18

MUMBAI(Commoditiescontrol)- Global cotton production forecasts to rise 8 percent to 24.9 million tons (1,464 lakh bales of 170kg each) due to expansion of 8% in planted area to 31.7 million hectares in 2017-18 due to higher price received by farmers in 2016-17. However, the area remained below the 20-year average of 32.7 million hectares. The world average yield is forecast at 785 kg/ha.



PRODUCTION: India is expected to remain the world’s largest producer in 2017/18 with output increasing by 6% to 6.1 million tons.

After falling by 6% in 2016/17, China’s production is projected to rebound by 7% to 5.2 million tons.

Production in the United States is expected to rise by 10% to 4.1 million tons as high prices, sufficient soil moisture in dryland areas and beneficial weather during planting encouraged farmers to expand cotton area by 18% to 4.5 million hectares.

After two seasons of contraction, better expected returns for cotton encouraged farmers to expand cotton area in Pakistan by 9% to 2.7 million hectares. Assuming the average yield rises by 8% to 717 kg/ha, Pakistan’s production is projected to increase by 17% to 2 million tons, which is similar to its 15-year average.

Cotton production in Brazil is forecast to increase by 5% to 1.6 million tons as high returns in 2016/17, resulting partially from a 17% increase in the average yield, are likely to encourage farmers to expand cotton area.

CONSUMPTION: World cotton consumption in 2017/18 is forecast to rise by 2% to 25 million tons.

A modest 1% increase is projected for China, the world’s largest cotton consumer, with its mill use reaching 8.1 million tons in 2017/18.

After declining by 3% in 2016/17, consumption in India is forecast to increase by 2% to 5.3 million tons in 2017/18.

Pakistan’s mill use is expected to rise by 4% to 2.2 million tons, which follows a 13% decrease in mill use in 2015/16 and stagnation in 2016/17.

Consumption in Bangladesh is projected to rise by 5% to 1.5 million tons due to strong demand domestically and internationally, and Turkey’s mill use is expected to remain stable at 1.5 million tons.

EXPORTS: World cotton trade is projected to decline by 1% to 7.8 million tons. While the United Sates is expected to remain the world’s largest exporter, its exports are nevertheless forecast to decrease by 8% to 2.9 million tons.

India’s exports are forecast to rise by 2% to 930,000 tons, and Australia’s exports are projected to increase by 8% to 760,000 tons.

IMPORTS: Bangladesh, Vietnam and China are expected to remain the world’s three largest importers. Bangladesh’s imports are projected to increase by 7% to 1.5 million tons, Vietnam’s by 5% to 1.3 million tons, and China by 4% to 1.1 million tons.

ENDING STOCK: World ending stocks are projected to decrease by 1% to 18.8 million tons in 2017/18, with increases outside of China offset by decreases in China’s stocks. China’s stocks are expected to decline by 16% to 8.9 million tons. Ending stocks outside of China are forecast to grow by 19% to 9.8 million tons.

PRICE FORECAST: The Secretariat forecasts that the A Index in 2017/18 will range between 54 cents/lb and 87 cents/lb with a midpoint of 69 cents/lb. The midpoint would be 13 cents/lb lower than in 2016/17.

This follows the large increase of 12 cents/lb from 2015/16 to 2016/17, which suggests that such a drop is not unreasonable. However, the season-average A Index in 2016/17 ended up being much higher than the Secretariat initially forecast, and market fundamentals do not explain why this occurred.

Given what happened in 2016/17, it is difficult to say whether the current forecast for 2017/18 will hold up well over the season.

CLICK HERE: View the following table in Indian Bales

1/ The inclusion of linters and waste, changes in weight during transit, differences in reporting periods and measurement error account for differences between world imports and exports.

2/ Difference between calculated stocks and actual; amounts for forward seasons are anticipated.

3/ World-less-China's ending stocks divided by world-less-China's mill use, multiplied by 100.

4/ China's ending stocks divided by China's mill use, multiplied by 100.

5/ U.S. cents per pound.

(By Commoditiescontrol Bureau; +91-22-40015534)