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US cuts plantings despite global cotton demand to rise
Feb. 14, 2013
The National Cotton Council economists say cotton's 2013 outlook will be influenced by China's policy decisions and continued competition from man-made fiber (MMF).
The NCC sees 2013 world mill use of 108.7 million bales, an increase of 2.5 percent from 2012. More specifically, international mill demand outside of China is estimated to increase by 5.7 percent for the 2013 crop year, with more than half of the growth being accounted for by India and Pakistan.
However, Gary Adams, Ph.D., the NCC's vice president Economics & Policy Analysis, told delegates at the NCC's 75th Annual Meeting in Memphis last week that recent data on fiber market share clearly demonstrates the many challenges in terms of competition from MMF that the cotton industry faces in 2013.
According to Adams, "Measured on the basis of pounds of cotton fiber, the 2012 U.S. retail cotton market fell to the lowest level since 1996, amid a fourth consecutive year of declining market share."
Calendar 2012 retail cotton consumption is estimated to be the equivalent of 17.0 million bales of fiber.
Cotton is unlikely to reclaim market share unless cotton prices trade at levels below polyester, Adams said.
Beijing has been paying as much as 60 percent higher than world prices for the country’s crop as part of a program to support the country’s farmers.
NCC economists assume China will continue to build government reserves, holding 38.8 million bales by the end of the 2013/14 marketing year.
As the world demands more cotton, U.S. farmers are planning to plant 27 percent less cotton than was grown in 2012. Fluctuating prices in the U.S. and a stronger grains market is the reason many growers are planning to plant less cotton in the United States.
Source: Ag Professional
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