The recovery in cotton production for 2017-18 will continue, and growth is projected at 11 percent as planting area is expected to increase, yielding a projected 25.4 million tons, the International Cotton Advisory Committee reported.
Following the sharp drop in production in 2015-16, production in 2016-17 recovered 7 percent to 23 million tons. Production in the U.S. for the current season is expected to increase 25 percent to 4.7 million tons, ICAC said.
India remains the world’s largest producer, with 2017-18 production expected to grow 8.7% to 6.2 million tons. The second largest producer, China, has production currently projected at 5.2 million tons, representing a 7.1% increase. Pakistan’s production projections for 2017-18 show an 11.5% increase to 1.9 million tons, while production in Turkey is estimated to grow 18 percent to 829,000 tons. Other major cotton producing countries are expected to have positive growth attributed to increased area and yields.
International cotton prices have continued to move upward over the last few months as the season has been underway, ICAC noted. From the season low of 77 cents per pound at the start of season, prices were at a season high of 88 cents per pound at the end of this calendar year.
The current season average of 80 cents per pound compares to the 2016-17 average of 83 cents per pound. With a lower international price from the previous season and the rising price of competing fibers, global consumption is expected to grow, ICAC said.
[Read more about cotton prices: Cotton Prices 2017: The Year in Review, Looking Ahead]
ICAC forecast cotton prices at 74 cents a pound as measured by the Cotlook A index of average prices on the international raw cotton market. That represented an upgrade of 2 cents a pound on the previous forecast, and reflected a downgrade to the forecast for world cotton stocks, on a lower estimate for output from Pakistan.
The forecast signals an expectation that prices will fall from current levels, with the Cotlook A Index ending the day on Thursday at 88.8 cents a pound, and having averaged about 83 cents a pound so far in 2017-18.
Cotton prices proved one of the top performers among agricultural commodities last year, with New York cotton futures rising 11 percent thanks to strong U.S. export sales.
However, Agrimoney.com noted that some commentators have forecast a weaker performance ahead, with Societe Generale on Tuesday rating cotton futures as “vulnerable to retracement” because of the extent to which the contract has been overbought.
The bank cautioned of pressure on prices once “the pace of U.S. exports slows and supply outside of the U.S. picks up.”
After stagnating in 2016-17, global cotton demand is expected to increase 3 percent in 2017-18 to 25.2 million tons. Chinese mill use is expected to remain stable at 8.1 million tons, while India and Pakistan are expected to increase 3 percent and 4 percent, respectively. Consumption in Vietnam is expected to grow 12 percent to 1.3 million tons. Moderate growth of 2 percent to 3 percent is expected for other major consuming countries of Bangladesh, Turkey and the U.S.
Meanwhile, the ICAC stressed the boost to cotton demand expected from factors including rising prices of oil, which can affect synthetic fiber prices such as polyester and nylon.
The Bloomberg Commodities Spot Index, tracking the price of 22 raw materials, jumped to its highest since December 2014 on Thursday. The gauge has risen for a record 14 days in a row.
According to a September study by the International Monetary Fund, a 10 percent gain in the price of oil increases, on average, domestic inflation by about 0.4%, which could help push U.S. inflation back toward the Federal Reserve’s 2 percent target, Bloomberg noted.
Uzbekisyan is well on its way to eradicating forced and child labor from its cotton supply chain, and with it the stigma that has plagued the sector and causes many U.S. and European brands from buying the raw material.Read more
The rapid rise of e-commerce is causing companies to rethink their logistics strategies and is sending ripples into the warehouse real estate market.Read more
UPS Capital, a subsidiary of UPS Inc., has expanded UPS Capital Cargo Finance service with new options on in-transit cargo for U.S. importers.Read more
The Ditto Smart Hanger could be a solution for retailers that are struggling to streamline inventory costs, stay sustainable and further engage consumers.Read more
Even though sustainable fashion is in its beginning stages, some retailers are taking the steps to accelerate the industry’s circular future.Read more
Amazon Go, Amazon's anticipated high-tech retail outpost, is now officially open, allowing shoppers to grab and go—without a stop at the register.Read more
Under the Bangladesh Accord, an unnamed clothing brand has been instructed to address safety issues in more than 150 factories.Read more