ICAC sees Pakistan’s cotton production to jump 35 percent

LAHORE: Cotton production in Pakistan is expected to jump 35 percent to 2.1 million tons, as yields recover, the International Cotton Advisory Committee (ICAC) said in its monthly review.

Cotton planting in Northern Hemisphere countries commences this month. In 2016/17, world cotton area is expected to expand one percent to 31.3 million hectares. This increase in cotton area is despite the fact that from December 2015 to February 2016, international cotton prices as measured by the Cotlook A Index averaged very low at 69 cents / lb.

However, prices for competing crops during the same period fell by a higher percentage, making cotton more competitive this year as compared to the last year.

World cotton production in 2016/17 is projected to increase by four percent to just under 23 million tons, as the world average yield is anticipated to improve by four percent to 732 kg/ha, it said.

In 2016/17, India’s area is forecast to go up four percent to 12.4 million hectares due to improved domestic cotton prices in 2015/16.

Assuming yield is similar to the four-year average of 522 kg/ha, while production could reach 6.5 million tons in 2016/17, the ICAC said.

In March, the Chinese government announced a reduced target price for Xinjiang of 18,600 yuan / ton. As a result, area is likely to contract by 10 percent to 3.1 million hectares and production to decrease to 4.6 million tons.

Cotton area in the United States is projected to increase by two percent to 3.3 million hectares and production by nine percent to 3.1 million tons.

After a decline of two percent in 2015/16, world cotton consumption is anticipated to remain stable at 23.9 million tons.

The ICAC also said that consumption in China is projected to decrease by five percent to 6.8 million tons due to increase in wages, high domestic cotton prices and low polyester prices.  In 2016/17, Vietnam’s cotton consumption is forecast to rise 16 percent to 1.3 million tons, making it the fifth largest consumer.

Consumption in Bangladesh, the sixth largest cotton producing country, could increase by 10 percent to 1.2 million tons. After several seasons of growth, cotton mill use in India and Pakistan contracted in 2015/16 due to weaker demand.

However, India’s consumption is projected to rise by four percent to 5.5 million tons and in Pakistan by one percent to 2.2 million tons, it said.

After a decline of three percent in 2015/16, world cotton trade is expected to recover by one percent to 7.5 million tons in 2016/17, as consumption grows in import dependent countries.

Vietnam and Bangladesh are likely to be the two largest importers of cotton in 2016/17, with import volumes expected to rise by 25 percent to 1.4 million tons and by five percent to 1.1 million tons, respectively.

China could see imports fall by 13 percent to 936,000 tons. Exports from the United States are projected to increase by one percent to 2.2 million tons, while exports from India are forecast to decline by 13 percent to one million tons.

In 2015/16, world ending stocks are expected to shrink by eight percent to 20.3 million tons. The growth in cotton production and consumption remains stable means that the reduction in stocks in 2016/17 will likely to be smaller.  The ICAC projects world ending stocks to fall by five percent to 19.4 million tons.