Global cotton production to rise 8% in 2012
Inter-governmental group the International Cotton Advisory Committee (ICAC) has forecasted global cotton production to rise by 8% year-on-year in the 2011/12 season to 26.8 million tons, but says consumption could decline by 2% to 23.9 million tons.
As a result of the projected surplus of 2.9 million tons, global cotton stocks could rebound to 11.9 million tons by the end of 2011/12. This recovery follows two seasons of relatively low global stocks.
Purchases by the Chinese government are absorbing a large portion of the 2011/12 global cotton crop, according to the ICAC. Almost 40% of the gain in global stocks this season could take place in the country, due to the rebuilding of the national reserve, the ICAC believes.
Between 8 October and 30 December 2011, a total of 2.1 million tons of domestic cotton were purchased for the China national reserve. Daily purchases are continuing. There is no limit to the amount of domestic cotton to be purchased by the national reserve this season.
In addition, it is reported that about 1 million tons of non-Chinese cotton has been bought for the reserve; this cotton will be shipped to China over the next few months.
Overall, the national reserve, which was almost exhausted by the end of 2010/11, could grow by at least 3 million tons or 11% of 2011/12 global production. It is possible that some of the reserve cotton will be sold later in the season.
The Chinese government began stockpiling cotton in September 2011, in a move designed to stabilise domestic cotton production and help avoid fluctuations in cotton prices. The scheme will run for seven months until the end of March 2012.
Outside of China, cotton stocks are expected to grow by 26% to 8.7 million tons in 2011/12, the largest in four years.
