Cotton prices are likely to slide further amid gloomy prospects for global consumption. Global cotton prices have already corrected by close to 26 per cent in the past one year from 99.5 cents a pound in August 2018 to 74 cents in July 2019.

In its August report, the International Cotton Advisory Committee (ICAC) has projected dim prospects for global cotton demand while production for 2019-20 is likely to increase.

Higher output

“Global cotton consumption is projected to increase by 1.7 per cent in the coming season, but if production grows by the expected 6 per cent, it will exceed consumption by about 300,000 tonnes. As a result, global stocks should swell to 18 million tonnes. Those factors, combined with tepid expectations for global economic expansion, have dimmed the hopes for next season’s cotton demand,” ICAC said in a statement on Thursday.

ICAC also noted that the optimism for a surge in global cotton demand for the season 2019-20 appeared to be waning. Cotton prices have been suffering from negative news since the market hit its seasonal high of 99.5 cents per pound in August 2018.

On Friday, ICE October cotton was quoted at 61.32 cents per pound, which is about 38 per cent drop from the highs.

ICAC has projected cotton production for 2019-20 at 27.2 mt(up 6 per cent from prior year), with consumption increasing 1.7 per cent to 26.9 mt .

There was hope that China and the US would resolve their trade differences at the G20 meeting held in June 2019 but there were no breakthrough even as the talks remain stalled with tariffs in place.

ICAC noted that at 5.9 mt, China is expected to remain the world’s largest producer in 2019-20, topping India’s projected 5.75 mt.

West Africa, meanwhile, is expected to see its production hit an all-time high of 1.3 mt.

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