Supply Up, Prices Down: Expectations for 2019/20 Cotton Demand Are Slumping

For Immediate Release 

 

Date Posted: 1 August 2019

 

Executive Summary

Highlights from the August 2019 edition of Cotton This Month:

  • Optimism for a surge in global cotton demand in 2019/20 is waning.
  • There was hope China and the USA would resolve their trade differences at the G20 meeting; there were no breakthroughs but talks continue.
  • Since August 2018, prices have dropped from 99.5 cents per pound to 74 cents in July.
  • Production in 2019/20 is expected to reach 27.2 million tonnes (up 6% from prior year), with consumption increasing 1.7% to 26.9 million tonnes.

 

 

Supply Up, Prices Down: Expectations for 2019/20 Cotton Demand Are Slumping

Global cotton consumption is projected to increase by 1.7% in the coming season, but if production grows by the expected 6%, it will exceed production by about 300,000 tonnes. As a result, global stocks should swell to 18 million tonnes. Those factors, combined with tepid expectations for global economic expansion, have dimmed the hopes for next season’s cotton demand.

 

Before meeting at the G20 meeting at the end of June, there was some hope that the trade war between the USA and China would be resolved. While tariffs have not escalated since then, talks remain stalled and they remain in place.

 

Cotton prices have been suffering from negative news since the market hit its season high of 99.5 cents per pound in August 2018, plummeting to 74 cents per pound by July 2019.

 

At 5.9 million tonnes, China is expected to remain the world’s largest producer in 2019/20, topping India’s projected 5.75 million tonnes. West Africa, meanwhile, is expected to see its production hit an all-time high of 1.3 million tonnes.

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About the International Cotton Advisory Committee (ICAC)

Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. The ICAC does not have a role in setting market prices or in intervening in market mechanisms. For more information, please visitwww.icac.org.