Page 8 - 22 Cotton SA magazine

/ MARKVERSLAG
/ MARKVERSLAG

COTTON SA

by Hennie Bruwer and Helena Claassen, Cotton SA

LOWER WORLD COTTON lower based on a reduction in hectares to be planted
PRICES EXPECTED IN with cotton. The American crop is expected to be lower
2020/21 based on the drought conditions in Texas.
INTERNATIONAL OUTLOOK
With falling demand, global cotton prices
have declined in 2019/20. The season
average of US71,3 cents per pound
represents the third consecutive season
of declining cotton prices. The sharp
decrease in global consumption coupled
with a global increase in production have
put pressure on prices in 2019/20.
The global COVID-19 pandemic de-
creased the demand for cotton. Cotton
spinners, textile and clothing manufacturers
have had to reduce their activities as a Aug–Jul 2020/21
result of few orders to fill. World cotton balance 2019/20 July August
It is projected that economic activity sheet
and consumer demand could increase Million metric tonnes lint
due to lower cotton prices and that global Beginning stocks 18,72 21,96 21,99
economic growth should materialise. Production 26,16 24,77 25,05
This could lead to a recovery in cotton
consumption in the 2020/21 season. Mill – use 22,70 23,85 24,34
Cotton consumption for 2020/21 is Ending stocks 21,99 22,88 22,71
esti mated to be 24,3 million tonnes, a 5%
increase from the previous season. Cotton Stocks/use (excl. China) 83% 87% 83%
production for 2020/21 is projected at
25,05 million tonnes, a 5% decrease from
the previous season.
The decline in production is due to
a global area decrease of two million
hectares. The decrease in hectares is the
result of the COVID-19-induced economic
crisis. Farmers in West Africa and Egypt
are likely to change to planting food crops
instead of fibre crops. Cotton production
in India is expected to be strong, while
production in China is expected to be

Quotes in US cents Today Season low Season high One year Two years
per pound (01/09/20) ago ago
Current Cotlook A Index 70,85 68,20 71,60 70,15 92,15
NY Futures Nearby Contract a 64,41 61,84 65,16 59,05 82,31
Basis b 6,44 6,34 6,87 11,10 9,84
2020/21 average to date 69,99 a Previous day’s close
2019/20 average 71,33 b Current A Index minus Nearby NY (previous close)
Source: Cotlook Ltd.
8 | Katoen SA \\ Cotton SA