OECD-FAO Agricultural Outlook › Cotton
The expected release of accumulated global stocks will boost consumption on the back of lower prices, before prices recover by 2023.
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.
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.
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.