May 3, 2012
World's 2012 cotton trade to rise 13% on increase China imports
The assessment of International Cotton Advisory Committee (ICAC) stated that global cotton trade will be higher by 13% to 8.6 million tonnes in 2012 as pushed by China's intensive buying.
The most populous nation will account for 52% of world imports this season ICAC added. The record China Imports is expected to offset the projected fall in imports by the rest of the world by 18% to 4.2 million tonnes. The surge in Chinese imports has reduced the amount of cotton available in the rest of the world this season.
US exports are dropping by 21% to 2.5 million tonnes due to reduced supplies but shipments from India Brazil and Australia could reach record levels. As a result while stocks in China are expected to more than double to five million tonnes in 2011-12 stocks in the rest of the world will increase at a more moderate rate of 14% to 8.1 million tonnes.
India which imposed a ban on cotton exports in early March this year has now allowed unrestricted export of the commodity after an assessment of the domestic market situation. With China having amassed huge reserves of cotton new exports from India is likely to head for Bangladesh and other nations analysts said. Cotton plantings for 2012-13 are now progressing in the northern hemisphere.
World cotton area is expected to decrease by 7% to 33.6 million hectares in response to lower prices improving attractiveness of grains and soy and rising agricultural production costs. Based on average yields world production could decline by 7% to 25.2 million tonnes. The decline in production will be driven by China expected to produce a crop of 6.4 million tonnes or 13% lower than in 2011-12.
Production is also expected to decline in India Pakistan Brazil and Turkey. US production could rise by 11% to 3.8 million tonnes despite reduced plantings assuming improved weather and lower abandonment than in 2011-12. After two seasons of decline global cotton mill use is projected to increase by 4% to 24.1 million tonnes in 2012-13 driven by improving economic growth and lower cotton prices. With global production exceeding global consumption again global stocks are expected to continue increasing by 9% to 14.3 million tonnes or 59% of world mill use.
The projected accumulation of cotton stocks will weigh on international cotton prices in 2012-13 but the extent of this downward pressure will depend in large part on how the Chinese national reserve is handled.
