Overview of cotton

The expected release of accumulated global stocks will boost consumption on the back of lower prices, before prices recover by 2023.


Market situation

World cotton prices in 2013 were influenced by competing forces, with world demand again rising after a prolonged decline that began in 2007 and elevated stock levels creating uncertainty about future prospects. Falling prices for grains and oilseeds helped reduce cotton prices, but tight supplies of high quality cotton in the United States offset some of this impact. World cotton stocks rose for the fourth consecutive year, but again most of the increase was accounted for by official reserve building in China. Consumption continued to decline in China - the world’s largest industrial consumer by a large margin - but increased in a number of other countries as China’s yarn imports rose sharply.

Steady to higher world production is widely foreseen in the coming year, with early reports indicating an intention of US farmers to plant 4.5 Mha, a 7% increase. China’s area is expected to decline, as the support for farmers in China’s eastern provinces is reduced.


Projection highlights

World cotton use is expected to grow at 2.4% p.a., a rate slightly above the long term average of 1.9% over the coming decade. In 2007, world consumption reached a peak of 26.7 Mt, and following significant declines during 2008-11 - and with a relatively slow recovery - this peak is not likely to be surpassed again until 2016.

  • World production is expected to grow more slowly than consumption during the first years of the outlook period, reflecting the large global stocks that accumulated between 2010 and 2014. World cotton area grows throughout the projection period, finally surpassing in 2020 the recent peaks seen in 2004 and 2011. Yields rise around the world, but global average yield grows very slowly as global output switches from relatively high-yielding countries, like China, to relatively low-yielding ones in South Asia and Sub-Saharan Africa.
  • World trade rises at a rate above its long-term average in the Outlook, with exports in 2023 12% above those in the base period. The United States retains its position as the world’s largest exporter accounting for 24% of world trade. India retains its position as the world’s second largest source of cotton while increasing its global share from 18% in the base period to 20% of exports by 2023.
  • China retains its position as the world’s largest import market for cotton throughout the outlook period. But, by 2023 China’s share of world trade is foreseen 16 percentage points below its base period 47% share. Bangladesh’s share rises more than any other importer, up from 8% to 12%. Viet Nam, Turkey, Pakistan, and Indonesia are also expected to realise larger shares.


Figure. Cotton prices rise between 2000-09 and 2014-23
Evolution of world cotton prices in nominal (left) and real terms (right) to 2023ª

Note: Cotlook Ltd A Index: ª) Real cotton prices are nominal world prices deflated by the US GDP deflator (2005=1).
Source: Cotlook Ltd and OECD and FAO Secretariats.


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