High Cotton Prices Are Expected To Drop By 19% Next Year.

The global demand and demand forecast for June released by the International Cotton Advisory Committee (ICAC) considers that global cotton consumption in 2019/20 is projected to be 23 million tons, down 11.3% from the same period last year. Output is expected to be 26 million 200 thousand tons, up 2% over the same period last year. Final inventory is expected to increase to 21 million 750 thousand tons, the highest in nearly five years.

Affected by the new crown epidemic, global cotton consumption and imports declined significantly, and the decline in retail consumption of all major consumer countries led to a reduction in orders for textile mills. China's consumption is expected to decline by 12% to 7 million 250 thousand tons and imports to 1 million 900 thousand tons. Consumption in India is expected to decline by 12%, to 4 million 750 thousand tons, and inventory is estimated at 2 million 800 thousand tons, a record high. India CCI has acquired a lot of cotton, bringing pressure to domestic and international cotton prices. India's domestic consumption is expected to drop to its lowest level in nearly seven years after the decline in global cotton consumption, the closure of textile mills and the loss of labour force. CCI's active export opportunities are expected to boost India's cotton exports.

The reduction of global cotton consumption this year is mainly concentrated in Asia and Southeast Asia. Consumption in Pakistan is expected to be reduced by 7% to 2 million 200 thousand tons, Turkey is expected to reduce 8% to 1 million 400 thousand tons, Vietnam to reduce 8%, to 1 million 400 thousand tons, and Bangladesh to 25%, to 1 million 200 thousand tons. In 2019/20, cotton consumption in Brazil is expected to decline by 11% to 650 thousand tons, and 1 million 750 thousand tons were exported as of April, and the total export volume is expected to be 1 million 820 thousand tons in the whole year.

This year, US consumption is expected to reduce to 580 thousand tons, and export volume to 3 million tons, down 8% compared with the same period last year, and final inventory is expected to increase to 1 million 900 thousand tons. Under the support of domestic agricultural support policy, the cotton planting area in 2020/21 decreased by 2% over the same period last year, to 4 million 600 thousand hectares, and the output is estimated at 4 million 250 thousand tons. Despite the sharp fall in international cotton prices, if the United States and China continue to implement the agreement, the United States is expected to export 3 million tons of cotton next year.

In 2019/20, global cotton imports are expected to drop to 8 million 340 thousand tons, down 9.6% from the same period last year. According to IMF's forecast of economic recovery, the recovery of global cotton trade next year is expected to be limited. To bring cotton consumption back to the level before 2018/19 (26 million tons), global consumption growth must exceed 12%. ICAC expects global consumption in to be 23 million 750 thousand tons, up 3% over the same period last year. Due to high inventory, low consumption and high output, the international cotton price will continue to be under pressure next year. ICAC estimates that the average A index in the 2019/20 year is 72.8 cents, and the average next year is 58.8 cents.