China overtakes India’s lead in the global production of cotton

China overtakes India’s lead in cotton production. The latest forecasts of the International Cotton Advisory Committee (ICAC) indicate that China will increase by 1% the production of that raw material in the 2018-2019 campaign. India, by contrast, will reduce it by 7% due to the lack of rain.

If the forecasts are right, India would lose the leadership it has hept from the last two years, since the Chinese Government changed its policy of incentives to cotton crops. It is estimated that China will close the 2018-2019 campaign with 5.94 million tonnes.

The demand for this raw material will fall 0.8% during the 2018-2019 campaign, to 26.72 million tonnes. That descent contrasts with the escalating consumption from the past seasons.

In 2017-2018, the demand grew 9% compared to the previous year. The present campaign is characterized by a rise in prices, which stand at 89 dollar cents per pound; a fall of 0.19% in production, the first in three seasons, and a new drop in stocks, reaching lows equivalent to the ones in 2011-2012.

China will rise by 1% its cotton production in the 2018-2019 campaign, to 5.94 million tonnes

In case of closing the campaign at 89 cents per pound, cotton will have risen its price by 1.13% compared to the previous year. In this way, cotton will continue with the escalation that began in the 2017-2018 season, when its prices rose by 6%, from 83 cents to 88 cents.

The increase in prices is directly related to the decrease in production and the increase in demand, which will cause a reduction in global stocks during 2019. In fact, cotton reserves will decrease by 6.6% in the 2018-2019 season, to 17.6 million tonnes.

This is the lowest figure since the financial year 2011-2012, when crops in the United States and China were affected by climatic factors, and the price of cotton registered historic peaks.

According to Icac, the consumption of cotton at the present time will not be affected by the trade war between the United States and China, but could have an impact on textile trade if it slows down the economic development. On the other hand, the increase of production in countries such as China, Brazil, regions of West Africa, Turkey and Uzbekistan will not compensate the fall of the United States, India, Australia and Pakistan.