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WASHINGTON – Water availability and related environmental challenges are hitting cotton crops. The latest figures from the International Cotton Advisory Committee (ICAC) show cotton consumption and demand are strong, but the breaks on both are being applied by sustainability challenges. This is the first time we have seen ICAC so transparently indicate how the economic growth of the cotton sector is being impacted by environmental issues, and this is surely a trend we will continue to see moving forwards – with huge implications for apparel brands and their sourcing strategies.

The figures from ICAC show cotton demand is strong, with consumption projected to increase 4 per cent to reach an all-time high of 27.5 million tonnes in 2018/19. “Farmers’ ability to capitalise on the strong demand is limited due to environmental stresses and water availability,” adds note from ICAC.

The cotton area in 2018/19 is projected to decrease in major producing countries including India (11.9 million hectares, down 3 per cent) and the USA (4.25 million hectares, down 5 per cent) although it should remain stable in China at 3.3 million hectares.

After dropping from a season-high of 101.7 cents per pound in mid-June to 92 cents per pound in early July, prices have bounced back and remain higher than the season average of 88 cents per pound.

Trade wars are also impacting the dynamics of the sector. ICAC suggests that although China’s tariffs on US cotton helped drag international prices down from June’s season-high of 101.7 cents per pound, strong demand in Asia and Southeast Asia has helped them rebound by the beginning of August.

ICAC adds: “Usually, high prices drive an increase in cotton cultivation, but less-than-ideal environmental conditions and a lack of available water are projected to cause a reduction in planted area for many of the world’s top producers in 2018/19.

“Sour trade relations between China and the USA show little signs of improving, and could even deteriorate further in the near term, potentially causing major shifts in global trade patterns. China’s 25 per cent premium could prompt the USA, the world’s largest exporter, to seek new markets for its fibre, while other major exporters such as Brazil are expected to fill the void by increasing their shipments to China, the world’s largest importer.”

ICAC says global production has increased 16 per cent to 26.87 million tonnes in 2017/18, with increases expected from all major producers: India, China, USA, Brazil, Pakistan, West Africa, Turkey, Australia and Uzbekistan. Those increases, however, are the result of expanded plantings and favourable weather conditions, as global yields posted a marginal increase of 1 per cent.

Global production for the 2018/19 season is currently projected at 25.9 million tonnes, which would represent a 4 per cent decrease. Global consumption, on the other hand, is currently projected to increase 4 per cent to 27.5 million tonnes.

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