How Are ICAC Projections Doing Halfway Through the 2022/23 Season?

Date Posted: 1 February 2023

Making any kind of prediction about what will happen in the future is an inherently risky proposition, and that goes double for an industry as volatile as cotton. Nonetheless, it's the job ICAC Data Scientist Matthew Looney signed up for, and in the just-released edition of Cotton This Month, he takes a clear-eyed look at how accurate his projections are now that we're halfway through the 2022/23 season.

In the June 2022 edition of CTM, the first official publication of numerical value projections and narration surrounding the 2022/23 projections were disclosed. Global production was forecasted at 26.13 million tonnes while consumption was projected to decrease only slightly to 26.09 million tonnes. An increase in production and only a very small decrease in consumption certainly indicated good times ahead.

Then Mother Nature got involved, subjecting two major cotton producing countries, the United States and Pakistan, to severe drought and catastrophic flooding, respectively. The weather has always been a wild card for cotton but the erratic adverse weather patterns are intensifying as a result of climate change, so it's understandable when things that are completely unpredictable are missed.

'In hindsight, the high inflation numbers posted around the time of writing the June 2022 CTM should have been given more weight', said Mr Looney, author of Cotton This Month. 'All in all, 2022/23 has been a bad season for production, consumption — and projections. But on the bright side, the season is only half over, and I prefer to be optimistic', he added, pointing to falling inflation numbers and the fact that general economic indicators are moving in the right direction.

Price Projections
The Secretariats current price forecast of the season-average A index for 2022/23 ranges from 96 cents to 126 cents, with a midpoint at 104 cents per pound. The price projection for 2022/23 is based on the ending stocks-to-mill use ratio in the world-less-China in 2020/21 (estimate), in 2021/22 (estimate) and in 2022/23 (projection), on the ratio of Chinese net imports to world imports in 2021/22 (estimate) and 2022/23 (projection), and the average price in 2021/22. The projection reflects a 95% confidence interval.

Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The Cotton Update is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 February 2023. The next Cotton This Month will be released on 1 March 2023.
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. In addition, members can take advantage of the ICAC’s global network of cotton researchers, whose expertise covers the supply chain from farm to textile manufacturing, and have free access to its cutting-edge technologies like the voice-based app and virtual technology cotton training programme. Committed to ensuring cotton’s continued sustainability, the ICAC is the only intergovernmental commodity body covering cotton that is recognised by the United Nations. For more information, please visit www.icac.orgTwitter or LinkedIn