Global cotton trade likely to decline by 11% in 2014-15: ICAC
New Delhi: Global cotton trade is likely to decline by 11 per cent to 7.9 million tonnes in the ongoing 2014-15 season due to sluggish demand from the world's largest importer China, according to International Cotton Advisory Committee (ICAC).
World cotton trade stood at 8.86 million tonnes in the previous season (October-September).
“To promote consumption of domestically grown cotton, the Chinese government is limiting the volume of cotton imports, which (it) forecast down by 36 per cent to 2 million tonnes in 2014-15,” the US-based ICAC said in a statement.
However, imports elsewhere are expected to grow by eight per cent to 5.9 million tonnes due to gains in South and Southeast Asia where many consuming countries produce small quantities of cotton, it said.
Despite low prices, many mills are waiting to see if prices drop further before making large purchases, it said.
According to ICAC, the world average price is forecast to be around 74 cents per pound this season, lower than the average price of 91 cents in the previous season.
World cotton production in 2014-15 season is forecast to be at almost last year's level at 26.3 million tonnes, while global consumption is likely to pick up to reach 24.4 million tonnes by the end of 2014-15, it added.
Total consumption in China, the world's second-biggest cotton producer and largest consumer and importer, is expected to be just under 8 million tonnes.
The consumption in India, the world's largest cotton grower, is expected to be 5.3 million tonnes.
Consumption in Pakistan may grow by two per cent to 2.3 million tonnes but will depend on sufficient and stable electricity supply in the regions with highest concentration of spinning mills, ICAC said.
Bangladesh consumption is projected at 954,000 tonnes while Vietnam is expected to consume nearly 700,000 tonnes of cotton, up nine per cent from 2013-14, it added.
Given low prices and high production costs, ICAC said many governments of large cotton-producing countries, including India are taking measures to help growers.
For instance, China recently announced it would provide a cotton subsidy of 2,000 yuan per tonne to growers in nine inland provinces in 2014.
India did not buy at the minimum support price in last few seasons due to high prices, but prices have fallen enough to start cotton procurement at the support price this season.
In October, the Pakistani government announced a cotton support price of Rs. 3,000 per 40 kilograms. The Trading Corporation of Pakistan (TCP), which has not purchased cotton since 2005-06, will buy about one million bales of lint this month at the announced minimum support price, ICAC said.