GLOBAL cotton production for 2018/19 is forecast to be 119.4 million bales (Mb), down 3.5 per cent from the previous season, but up from the February 2018 forecast of 117Mb, according to the latest United States Department of Agriculture (USDA) outlook.

Much of the increase in estimates since February is attributed to better-than-expected crops in Brazil, China and Turkey.

Global use is also higher than originally forecast. Consumption forecasts have also risen since February, with current projections at 126.9Mb, up 2.9pct from the previous season.

Forecasts have edged up in most major markets as higher polyester prices have made cotton more competitive, and global macroeconomic conditions have supported higher end use.

While the higher production forecast mostly offsets higher consumption, global ending stocks are now forecast at 72.6Mb, 10.1Mb lower than the 82.7Mb indicated in February.

Nearly all the reduction in 2018/19 stocks is due to lower estimates for 2017/18 ending stocks, driven largely by historical revisions in October to several countries’ balance sheets, particularly India’s.

In addition to lower stocks, the current forecast shows a greater decline in those stocks during the current season.

Global stocks are now forecast to fall by 7.8Mb compared with the 5.8Mb decline expected last February.

China’s ending stocks are now forecast at 29.9Mb, 8.2Mb lower than beginning stocks.

As polyester prices have risen, and China’s internal cotton prices have moved closer to world prices in 2018, consumption has expanded and resulted in higher consumption in both 2017/18 and 2018/19.

This results in a drawdown of China’s stocks.

Ending stocks outside of China, however, are now forecast up 400,000 bales versus the 1.4Mb increase expected in February.

The bottom line is China’s stocks are projected to continue to trend lower, while stocks outside of China expand, albeit slightly, for the fourth consecutive year.

Production for 2018/19 is forecast down, led by the United States, India, and Pakistan, offsetting higher production in Benin.

Trade is projected down slightly. Global use is down, with reductions in most major markets.

Cotton production in Australia this season is projected to be around 2.2 million bales – down by more than half last season’s 4.6-million-bale crop due to diminished irrigation water supplies.

Source: USDA