Bullish trends expected in cotton trade

World cotton trade is likely to rise for the third consecutive season in 2018/19 – reaching its highest level in 6 years – thanks to growing demand from mills in non-producing countries like Bangladesh and Vietnam and a rebound in China’s cotton spinning.

According to latest estimates from US Department of Agriculture (USDA) global cotton trade likely to rise nearly 2 per cent in 2018-19 season. World trade is seen at 41.7 million bales in 2018/19 – 700000 bales above last season – but still 4.7 million bales below the record set 6 years ago in 2012/13.

As well as rising demand in Bangladesh and Vietnam, imports are also expected to increase once again this season into China, a major producer and spinner of cotton. This import demand is satisfied by a number of producing and exporting countries, with strong export prospects seen for the United States despite a reduction from 2017/18.

China’s State Reserve stocks of cotton reached an estimated 60 million bales in the spring of 2014, after 3 years of massive buildup. Chinese stocks are currently estimated at just under 13 million bales. This dramatic reduction was accomplished by 3 years of aggressive selling, with 11.5 million bales sold in the latest annual round of selling which ended in September.

Exports from India and Australia are forecast lower with reduced production prospects. Meanwhile, exports from Brazil are set to expand considerably as rising production over the past several seasons increases exportable supplies.

Production for 2018/19 is forecast down, led by Pakistan, China, and India more than offsetting higher production in Brazil. Trade is projected up with higher Brazil exports and rising Pakistan demand. Global use is down sharply mainly because of China’s lower-than-expected annual growth amid uncertain economic prospects and textile exports. The U.S. season-average farm price is unchanged at 74 cents/lb.

(Sourced from: www.indoasiancommodities.com)

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