Market news: The International Cotton Advisory Committee ICAC forecasts 5pc decline in world cotton production

ISLAMABAD: The International Cotton Advisory Committee (ICAC) has forecast five percent decrease in world cotton production during the crop season 2013-14.

According to ICAC report released on Thursday, an estimated 34.1 million hectares of cotton is being harvested during 2012-13, which is five percent below the previous season.

While another five percent drop to 32.2 million hectares is expected in 2013-14 and world production to drop by another six percent to 24.6 million tons during 2013-14.

The global cotton production is estimated to go down by five percent from 27.8 million tons to 26.3 million tons during this season, the report said.

From 2012-13 to 2013-14, cotton production in China and the United States each has been forecast to fall by 700,000 tons to 6.7 million tons and three million tons, respectively.

Meanwhile, cotton production in India is forecast to decline by 170,000 tons to 5.7 million tons as farmers continue to switch out cotton for more profitable alternatives, it said.

China’s production decline is also attributed to labour shortages as farm workers migrate to cities searching for urban employment.

Global cotton mill use is rising at an estimated seven percent from 22.1 million tons last season to 23.7 million tons in 2012-13 and mill use is projected to rise by another two percent to 24.3 million tons in 2013-14.

Mill use in China is falling to an estimated 8.3 million tons in 2012-13 as the national cotton policy remains unclear and another drop of 300,000 tons to eight million tons in 2013-14 is expected, the lowest in 10 years.

Imports by China are estimated at 3.7 million tons in 2012-13 and three million tons in 2013-14 and because of the Chinese national cotton reserve policy, a seismic shift in the location of world cotton use is underway. Decreased mill use in China will be partially offset by increases in India, Bangladesh, Turkey and Pakistan, it added.

The world cotton stocks are forecast to rise to 18 million tons by July 2014, which will represent approximately nine months of world mill use, the report said.

However, the ending stocks-to-use ratio in the world minus the Chinese reserve will drop to 37 percent in 2012-13 and to an estimated 30 percent in 2013-14, posing a potential challenge to the global supply of cotton next season, it added.

Assuming the Chinese government adheres to the current reserve policy, the Cotlook A Index is projected to average 88 cents and 122 cents per pound in 2012-13 and 2013-14, respectively.

Source print edition The News ( Pekistan )