The global cotton industry is facing significant reductions in both production and consumption according to the 2023-24 outlook of the Cotton: World Markets and Trade report by the US Department of Agriculture (USDA).
Production is witnessing a downturn for the second straight month, now standing at 112.4 million bales, a sharp drop of over 4.4 million bales compared to forecasts from two months prior. This decline is attributed to decreased outputs across numerous regions including West Africa, the United States, Greece, Mexico, and India, which have overshadowed the rise in production seen in Brazil.
The prediction for consumption has been reduced by 1.1 million bales to 115.9 million, partly because supply in major consuming countries like China and India are declining. According to the survey, even though consumption is projected to increase by 5 million bales over the previous year due to depleting resources and economic instability that is impacting utilization rates, the growth will be more muted.
Due to the decreased demand in major importing nations like Bangladesh and Vietnam, global trade predictions have also been adjusted downward by almost 600,000 bales to 43.3 million.
As a result of slightly declining supplies, export forecasts for the US indicate a decrease to a troubling 8-year low of 12.3 million bales. Additionally, the worldwide ending stocks will be reduced by over 1.6 million bales to 90.0 million bales, which is made worse by lower initial inventories and output, which outweigh the downward revision in consumption.
In the middle of this environment, it is anticipated that the US season average farm price for the years 2022-2023 will see a slight increase, rising by 1 cent to reach 80 cents a pound.
