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USDA predicts an increase in cotton production this year

The US Department of Agriculture (USDA) forecasts substantially higher production of cotton with a moderate increase in consumption. Global production is estimated at 104. 35 million bales (1 bale = 480 pounds) in 2016-17 compared to 99.54 in 2014-15, up 4.8 per cent. The likely increase in production is largely attributed to the US, India, and Pakistan. There aren’t any major increases in acreage, but extreme weather conditions and pest attack of last year that negatively impacted crop yields are not anticipated in 2016-17. In 2016-17, the USDA expects US cotton production at 14.8 million bales, India at 28 million bales and Pakistan at nine million bales, which are 15 per cent, 4 per cent, and 29 per cent higher than 2015-16 figures, respectively.

However, Brazil and China are likely to have lower production. China’s cotton production has been pruned for a third consecutive year to 23.8 million bales in 2015-16 and 22.5 million bales in 2016-17. The slide comes in the midst of lower price realisations (cotton prices lost 30 per cent in 2014), reduced support prices and increased preference for food grain crops.

The USDA estimates global cotton consumption at 110.78 million bales in 2016-17 compared to 109.02 million bales in 2015-16. China’s cotton consumption (use of cotton by mills) had gone down in recent years on account of factors like higher domestic prices, falling man-made fiber prices and overall industrial slowdown; and no major upturn is expected. However, cotton consumption in China is expected to grow slightly in 2016-17 on lower domestic prices.