Page 8 - 12 Cotton SA August 2017

COTTON SA MARKET REPORT

AS AT 1 AUGUST 2017

The large increase in ending stocks outside of China may
put downward pressure on international cotton prices.

he International Cotton Due to the fact that a number of
TAdvisory Committee (ICAC) large cotton producing countries
projects that world cotton produc- such as Pakistan and India are
tion will increase by 8% in 2017/18 likely to decrease their cotton
to 24.9 million tons. Cotton produc- imports in 2017/18 due to larger
tion in India, the world's largest domestic supplies, the ICAC
cotton producer, is expected to projects that world cotton trade will
increase by 6% to 6.1 million tons decline by 1% to 7.8 million tons in
in 2017/18 due an early and ade- 2017/18. While the USA is expect-
quate monsoon, a higher minimum ed to remain the world's largest
support price and the prospect of cotton exporter, the ICAC expects
better returns from cotton com- that its exports will decrease by
pared to competing crops. The about 8% to 2.9 million tons in
ICAC expects cotton production in 2017/18 due to more competition
China to rebound by 7% to 5.2 from other countries. The ICAC
million tons in 2017/18, which however forecasts that cotton
would be the first increase in five exports from India and Australia
seasons and is mainly due to high- will increase, by 2% to 930,000
er domestic cotton prices. In the tons and by 8% to 760,000 tons,
USA, higher cotton prices, suffi- respectively.
cient soil moisture in dryland areas
and beneficial weather during World ending stocks of cotton are
planting time encouraged farmers projected by the ICAC to decrease
to expand cotton area and the by 1% to 18.8 million tons in
ICAC estimates a 10% increase in 2017/18 but most of the decrease
cotton production to 4.1 million will occur in China where cotton
tons for 2017/18. Cotton produc- stocks are expected to decline by
tion increases are also expected 16% to 8.9 million tons at the end
s far as the local outlook is concerned,
from the two other large cotton of 2017/18. Ending stocks outside
Athe 7 estimate for the 2016/17
th
producing countries namely Paki- of China are forecast to grow by
production year indicates a total crop of
stan (+17%) and Brazil (+5%). 19% to 9.8 million tons in 2017/18
82 785 lint bales, up 64% from the previous
which may put downward pressure
season and 7% up from the previous month’s
The ICAC expects world cotton on international cotton prices. The
estimate. About 80 785 lint bales are
consumption to rise by 2% to 25 ICAC therefore forecasts that the A
estimated to be produced from RSA grown
million tons in 2017/18. A modest Index in 2017/18 will range be-
seed cotton, up 60% from the previous
1% increase is projected for tween 54 to 87 US c/lb with a mid-
season. The balance of 2000 lint bales
China, the world's largest cotton point of 69 US c/lb, which would be
relates to expected Swaziland produced
consumer, whilst cotton consump- 14 US c/lb lower than the 2016/17
cotton ginned by the Swaziland gin.
tion in India is forecast to increase average price index of 83 US c/lb.
by 2% to 5.3 million tons after
declining by 3% in 2016/17. Koot Louw - Cotton SA
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