Global Cotton-Ending Stockpiles Seen Higher as Output Gains
Cotton inventories at the end of July 2014 will be 11 percent higher than estimated last month as production gains outpace improved demand, according to an industry group.
Stockpiles will climb to 18.25 million metric tons, the equivalent of about nine months of global mill use, and up from 16.44 million forecast a month earlier, the International Cotton Advisory Committee said today in an e-mailed statement. In the 12 months that start Aug. 1, production will be 24.61 million, up 4.9 percent from April’s projection, the Washington-based group said. The consumption estimate was increased 2.3 percent to 24.25 million tons.
Cotton has slumped 6.5 percent in the past year and is down 62 percent since reaching a record in March 2011 as supplies outpaced waning demand. Imports by China, the world’s biggest consumer, will drop 19 percent to 3 million tons, ICAC estimates.
On ICE Futures U.S. in New York, cotton for July delivery tumbled 4.1 percent to settle at 83.87 cents a pound today, the biggest slump since June 21. Still, the fiber rallied 12 percent this year partly on speculation that China will add to government reserves. Next year’s global crop will be 6.6 percent lower than a year earlier.
“Because of the Chinese national cotton reserve policy, a seismic shift in the location of world cotton use is underway,” the group said. “Decreased mill use in China will be partially offset by increases in India, Bangladesh, Turkey and Pakistan.”
Cotlook Inc., which has published cotton news for more than 80 years, issues the Cotlook A Index, which reflects offer prices for cargoes delivered to the Far East. The index may climb to $1.22 next season from 88 cents, ICAC forecasts.
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