Global cotton consumption and output will be lower than estimated last month, an industry group said.
Demand in the year starting Aug. 1 will be 23.17 million metric tons, down from 23.53 million projected last month, the Washington-based International Cotton Advisory Committee said today in a report. Production will be 24.74 million tons, down from last month’s forecast of 24.87 million, ICAC said.
Consumption will be lower as “the rate of global economic growth is expected to remain slow, and because the high domestic cotton-support price in China is encouraging mills there to shift toward alternative fibers,” the group said.
Cotton futures have plunged 68 percent on ICE Futures U.S. in New York since reaching a record $2.197 a pound in March 2011 as demand tumbled in China, the world’s biggest consumer. The fiber has dropped 23 percent in 2012, the biggest loss among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index.
Stockpiles in the season that started today will climb to 15.19 million tons, up 0.4 percent from last month’s estimate of 15.13 million, and 11 percent higher than a year earlier, ICAC said.
In the year that ended July 31, Chinese stockpiles almost tripled to 6 million tons, boosting global inventories to 13.628 million tons. This season, “stocks could accumulate at a faster rate outside of China,” the group said.
“The projected accumulation of cotton stocks will weigh on international cotton prices,” ICAC said. “The extent of this downward pressure will depend in large part on how the Chinese national reserve is handled and on the timing and amount of additional import quotas.”