U.S. Department of Agriculture: World Cotton Production 2011/12

World cotton consumption in 2011/12 is expected to decline by about 4% for the second consecutive year. Slowing world economic growth, cotton prices have almost risen to an unprecedented level in 2011, and the Chinese government has purchased large quantities of cotton to establish official reserves. These factors constrain cotton consumption.

The International Monetary Committee predicts that the world economic growth in calendar year 2012 will be 3.3%, slightly lower than 2011. In contrast, the world economy grew by 5.2% in 2010, the world economy recovered from the initial global financial crisis, and world cotton consumption grew strongly. In the first decade of this century, the average annual growth rate was 4.1%. In the 2011/12 marketing year, the world economy was relatively weak. China and India are the world's largest cotton spinning countries, and their 2012 economic growth is expected to slow slightly. However, Europe is the focus of most concern. After the European economy grew by 1.6% in 2011, the Eurozone economy is expected to contract by 0.5% in 2012.

The 2010/11 cotton price hit a record high, resulting in adjustments downstream of the clothing and other textile supply chains, which will continue to affect cotton consumption in textile mills in 2011/12.

In 2010/11, the A-index (adjusted based on trade volume and inflation) rose by at least 75% from the previous year. In contrast, the largest increase in the previous 1973/74 was 57%. Secondly, the growth rate in 2009/10 is 27%. Polyester prices also rose, but there was no large increase in cotton, and the proportion of cotton used in competition with other fibers decreased. This was also confirmed by the US textile import data in the first five months of the year of sales. In the United States, the share of cotton in textile imports fell by 4% from the average of 2010/11 to less than 48%.

Due to concerns about extreme fluctuations in cotton prices and the depletion of government-owned cotton reserves in the fall of 2010, the Chinese government announced in April 2011 a plan to support agricultural product prices and production. This plan is an open commitment, when the price is lower than the established minimum price of 19,800 yuan/ton, according to the current exchange rate, it is about 1.42 US dollars/lb, and the country will purchase cotton as national reserve until 2012. 3 month.

As world prices are much lower than reserve cotton purchase prices, before the Chinese New Year in late January, domestic cotton purchased by national reserves approached 2.5 million tons (11.4 million bales), and one-third of the country’s output was strong. In addition, about 300-500 million bales of foreign cotton are also purchased by the Chinese government as reserve cotton. The total amount of Chinese government reserve cotton purchases is equivalent to nearly 15% of the expected world cotton consumption in 2011/12; therefore, reserve procurement competition from China is increasing world prices, hindering the ability of the global textile industry to purchase cotton for spinning.

So far this year, the initial indicators of global textile mill use have been weak, and annual consumption is expected to decline by 3.8%. In the first five months of the marketing year (August-December), the final surface consumption in the United States decreased by 20% from the previous year. The Indian Textile Commissioner’s Office reported that India’s cotton consumption so far (August-November) has decreased by 13%. The U.S. Department of Agriculture predicts that until the end of December, China’s net cotton textile exports will have decreased by 6%.

The year-on-year comparison in the first half of 2011/12 was somewhat distorted by the exceptionally strong demand at the beginning of the 2010/11 marketing year, when the world economy was recovering from the economic crisis of the previous year. For example, in the United States, the final amount of consumption and China's textile trade, the average activity growth rate (0.6 to 3.0%) in the remaining years of the market is negligible enough to cause a 4% reduction in annual usage.

The acquisition of China's reserve cotton may end. Therefore, it is necessary to supplement the yarn inventory. The economy will continue to grow for the rest of the year, and improvements are very likely to occur. The continuous deterioration of the economy is a downward risk, but from other factors, it may be offset by upward risks, such as the drop in cotton prices. In 2010/11, the A-index averaged 1.65 U.S. dollars per pound, which has plummeted in March-December 2011 and has recently stabilized at more than US$1.

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