The October global production demand forecast released by the International Cotton Advisory Committee (ICAC) believes that cotton demand will continue to decline in 2023/24, but global cotton exports are unexpectedly active.
In 2023/24, global cotton production is expected to be 24.98 million tons, and consumption is 23.31 million tons, a year-on-year decrease of 0.59%. Due to factors such as trade barriers, recession concerns, and inflation that have led to a slowdown in global economic growth, cotton demand has slowed throughout the 2022/23 season, and this trend will continue into the 2023/24 season.
Despite the contraction in cotton demand, global cotton exports are expected to grow strongly by 14.75%. East Asian countries are expected to continue to lead global cotton consumption, and consumption growth, although modest, will remain flat. China’s cotton consumption is expected to be 7 million tons, a significant year-on-year decrease, while India’s consumption has stabilized at 5 million tons.
Among all major consuming countries that rely on imports, the growth of cotton consumption has slowed down significantly. Bangladesh’s consumption is expected to increase by 6% to 1.7 million tons this season, but due to an 8% decline in 2022/23, the growth this season cannot make up for it. previous reduction. Vietnam’s consumption continued to grow significantly from 2011/12 to 2017/18, and the average growth rate in the next few years will drop to 2%, to approximately 1.6 million tons. This year, Vietnam’s cotton consumption is expected to increase to 1.5 million tons.
At present, global gauze stocks are abundant and digested slowly, making it difficult to promote upstream raw cotton consumption. Textile companies are unwilling to purchase large quantities. Therefore, cotton consumption data will continue to adjust as the year progresses. However, despite a slight year-on-year decrease in global consumption, cotton consumption in major consuming countries will increase slightly in 2023/24.
Affected by the slowdown in global economic growth, ICAC’s global cotton consumption forecast dropped from 24.41 million tons at the beginning of this year to 23.31 million tons. The later situation will depend on changes in trade conflicts, trade protection, and investment confidence. Although high interest rates will limit investment opportunities, the unstable global trade environment makes cotton consumption growth face a difficult environment.
Although cotton supply and demand are relatively loose this year, the Kotruk A index has recently risen to about 98 cents/pound, which is somewhat contrary to the fundamentals. This year, ending stocks outside China are expected to increase by 15% year-on-year. If the cotton consumption forecast is lowered later, cotton prices will be under greater pressure. Cotton prices are expected to remain relatively low this season as global production is expected to increase and consumption growth is weak.
ICAC predicts that the Kotruk A index in 2023/24 will be 69.69-105.01 cents/pound, with the middle price being 85.13 cents/pound.
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