News
Early Impacts of Covid-19 Are Crippling the Cotton Supply Chain
For Immediate Release
Date Posted: 1 April 2020
Executive Summary
Highlights from the April 2020 Cotton This Month include:
- The ultimate impact of Covid-19 on the cotton and textile industry is uncertain but the sector has been impacted along with the general economy
- Brands and retailers are cancelling orders, leaving spinners and textile manufacturers in Asia and Southeast Asia in a financial crisis
- The global consumption estimate has been revised downward to 24.6 million tonnes
Early Impacts of Covid-19 Are Crippling the Cotton Supply Chain
We don’t yet know what the ultimate impact of Covid-19 will be on the cotton industry, but the fast-moving pandemic has injected a tremendous amount of uncertainty into every link in the global supply chain. Millions of people are self-isolating and the cotton and textile business is at a virtual standstill.
As many businesses have been required to slowdown or close for the consideration of public health, manufacturing and supply chain activity in Asia and Southeast Asia have decelerated as orders have slowed or have been cancelled — and things could get much worse in the coming months. The initial impacts of Covid-19 on GDP growth in many major economies is likely to be significant in the short term.
The Secretariat’s current price projection for the year-end 2019/20 average of the Cotlook A Index has been revised to 73.5 cents per pound this month. Our first price projection for the year-end 2020/21 average of the Cotlook A Index is 64 cents per pound.
The global production estimate for the 2019/20 season remains unchanged at 25.9 million tonnes while our consumption estimate has been revised downward to 24.6 million tonnes.
Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The Cotton Update, which is included in the Cotton This Month subscription, is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 April 2020. The next Cotton This Month will be released on 1 May 2020.
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Please contact the author, Ms. Lihan Wei, with questions on this report.
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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 visit www.icac.org.