The global cotton industry is facing significant reductions in both production and consumption according to the 2023-24 outlooks of the Cotton: World Markets and Trade report by the US Department of Agriculture (USDA).
Production is witnessing a downturn for the second straight month, now standing at 112.4 mn bales, a sharp drop of over 4.4 mn bales compared to forecasts from two months prior. This decline is attributed to decreased outputs across numerous regions including West Africa, the United States, Greece, Mexico, and India, which have overshadowed the rise in production seen in Brazil.
On the consumption front, a reduction of 1.1 mn bales brings the forecast down to 115.9 mn, primarily due to diminishing supplies in major consuming nations such as India and China. Although consumption is anticipated to be 5 mn bales higher than the previous year, it represents a more restrained growth, stemming from depleted resources and economic instability which are affecting usage rates, as per the report.
Global trade projections have also been corrected downwards by approximately 600,000 bales to 43.3 mn, in light of the reduced consumption in major importing countries, notably Bangladesh and Vietnam.
The US is not exempt from the downturn with export predictions showing a decline to a worrying 8-year low at 12.3 mn bales, a consequence of slightly dwindling supplies. Moreover, the global ending stocks are poised to decrease by over 1.6 mn bales, reaching 90.0 mn bales, a situation exacerbated by reduced initial stocks and production outweighing the downward consumption revision.
In the midst of this landscape, the US season average farm price for the 2022-23 periods is expected to experience a minor increase, going up by 1 cent to stand at 80 cents per pound.