Global cotton consumption to decline 3.3 mn bales in Dec '22: USDA

Significant challenges for the three largest consumers — China, India, and Pakistan — are expected to lower global consumption significantly below the previous 2 years. India’s consumption is projected down 1 million bales this month to 23 million, falling more than 2 million from the previous year and the largest year-over-year decline for all cotton consumers. Significantly lower beginning stocks, falling exports of textiles (yarn and fabric) and cotton products, and less competitive yarn export prices are pressuring consumption prospects. Higher spot prices for cotton relative to other major spinners have eroded India’s stature as a competitive yarn exporter to China.

China’s consumption is also projected down 1 million bales this month to 35.5 million, marginally above the previous year but more than 5 million below 2 years prior. As the world’s largest cotton consumer and importer of cotton yarn, China’s supply and use situation is normally indicative of the overall direction and vitality of the global cotton supply chain, according to the report by USDA.

Ongoing COVID-19 lockdowns, slowing domestic purchases of apparel, declining yarn prices relative to cotton lint, and significantly lower cotton product exports have drastically slowed China’s consumption over the past 2 years. The US, the world’s largest importer of cotton products, showed lower imports of products from China by more than 40 per cent during the first 3 months of the marketing year (August – October 2022).

Pakistan’s consumption is estimated at its lowest level in over 20 years, forecast down 700,000 bales this month to 9 million, dropping nearly 2 million from the previous year mostly because of lower supplies. Pakistan’s production is projected at the lowest level in nearly 40 years at 3.7 million bales. Although imports are projected above the previous year at 5 million bales, mills in Pakistan have had issues with the stronger US dollar, opening letters of credit, and finalising older contracts which were negotiated at significantly higher prices earlier this year, as per the report.

Global cotton consumption is now projected at its second-lowest level in nearly a decade. If realised, this would reduce annual cotton use by nearly 6 million bales below the previous year and more than 11.4 million below 2 years prior.

Global production is down 700,000 bales from the previous month to 115.7 million, largely owing to lower production in Pakistan. This is the fourth consecutive month that Pakistan production has fallen and is supported by weak arrivals data. Global stocks are forecast up with consumption projected down more than 3 million bales. This is the seventh consecutive monthly decline for global consumption. Global trade is down roughly 1 million bales, led by a decline in China, and is now forecast lower compared with the previous year.

The US balance sheet shows higher production and ending stocks relative to the previous month. Exports and consumption are forecast down this month, and shipments are projected at the lowest level in 7 years. The projected US season-average farm price is unchanged at 85 cents per pound.

Fibre2Fashion News Desk (DP)