Global cotton area to fall 8% by 2012-13

After jumping to record highs in 2010/11, cotton prices dropped sharply in the current season, reducing farmers’ incomes and decreasing for the first time in three years the attractiveness of this crop when compared to that of its main alternatives.

As a result, the Secretariat from the International Cotton Advisory committee (ICAC) projects global cotton area to contract in 2012/13 by 8% to 33.3 million hectares and production to decrease by 6% to 25.1 million tons. Cotton production is expected to decline in most large producing countries, with the exceptions of the United States, Uzbekistan, and Australia.

Following two seasons at depressed levels, global cotton mill use is forecast to start growing again in 2012/13.This expectation is highly dependent on the assumption of a recovery in global economic growth that would stimulate purchases of textile products and consumption of raw fibers. The Secretariat forecasts global cotton mill use to rise by 3% in 2012/13 to 25.0 million tons, driven by Asia.

Rising mill use and lower cotton prices could fuel a rebound in world cotton trade in 2012/13. Imports and exports are expected to jump by 9% to 8.4 million tons. As global production and consumption are expected to roughly balance in 2012/13, global cotton stocks are forecast to increase only slightly, to 11.6 million tons.