Cotton fibre prices, production and consumption forecasts

Consumption of cotton fibre by the world’s textile mills in the 2021/22 season (August 1, 2021-July 31, 2022) is expected to rise by 1.9% compared with the corresponding period a year earlier, according to the International Cotton Advisory Committee (ICAC). This expectation is based on forecasts of a continued recovery after a 12.8% increase in consumption in the 2020/21 season, which followed a 12.5% decline a year earlier as a result of a slowdown in global economic growth and disruption to supply chains resulting from the COVID-19 pandemic. Production of cotton fibre, meanwhile, is expected to rise by 8.4% in 2021/22 after declining by 6.6% in the previous year. As a result, demand will be lower than supply in 2021/22, resulting in a rise in stock levels and, potentially, downward pressure on prices. Despite these developments, however, there has been upward pressure on prices as a result of expectations of strong demand and logistical issues which are impeding supply. According to the Economist Intelligence Unit (EIU), the cotton price will average 128 US cents/lb in the 2021/22 season—45 US cents/lb higher than in 2020/21. Looking ahead, global consumption of cotton fibre is expected to rise by 1.8% in the 2022/23 season, according to the EIU, reflecting an improvement in immunisation from COVID-19 and robust demand in smaller Asian nations. However, there are severe downside risks. These reflect, in particular, the impact of Russia’s invasion of Ukraine which has resulted in a highly uncertain economic environment. At the same time, production of cotton fibre is predicted to rise by 2.8% as the planted area is expected to increase because of the higher cotton price. As a result, production will remain above consumption and so there is likely to be a further rise in the stock level in 2022/23. Consequently, there is expected to be downward pressure on prices. Overall, the cotton price is forecast to average 121 US cents/lb and, if this comes to fruition, the cotton price will be 7 US cents/lb lower than in 2021/22. © Textiles Intelligence Limited 2022.