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World cotton stocks tightening

Jun 19, 2007 9:52 AM, By Elton Robinson
Farm Press Editorial Staff

Continued growth in world cotton consumption in 2007-08 and stagnating production are expected to result in the decade’s tightest world cotton stocks relative to consumption, according to a June 12 report from USDA’s Economic Research Service.

World ending stocks as a share of world consumption are expected to decline to 40 percent. If China’s stocks are excluded from the calculations, the decline is to 29 percent. The latter would be the lowest share of consumption since 1997-98.

Growth in world cotton consumption is expected to slow slightly in 2007-08. Consumption grew 5.5 percent in 2006-07, and annual growth averaged 5.3 percent during 1996-2006.

A 4-percent increase is expected in 2007-08, which is largely due to increased mill use in China. An 8-percent increase is forecast for China, or 4 million bales. Outside of China, total consumption is forecast to grow only 1.2 percent.

Vietnam and India are also expected to expand their consumption 8 to 9 percent.

While 4 percent is a slow world growth rate compared with recent years, it is more than twice the long-run 1.8-percent annual rate of the last 40 years.

Virtually no net growth is expected in world cotton production in 2007-08, as a 2.8 million-bale U.S. decline is offset by increases elsewhere. India’s output is expected to increase by 1 million bales, decisively moving India ahead of the United States to become the world’s second largest cotton producer.

Pakistan and Syria are also expected to increase production by a total of about 1 million bales. No change is expected in output by the world’s largest cotton producer, China, but the volume of unaccounted cotton there is expected to increase by 1 million bales, increasing the availability of domestic cotton in China.

e-mail: erobinson@farmpress.com