Governments alter cotton policies ahead of planting
The US (the largest exporter in 2012/13) and China (the largest producer and consumer in 2012/13) have recently changed their policies on cotton, just ahead of the planting season, which begins in the Northern Hemisphere in March.
In the US, the Direct Payments, Countercyclical Payments and Average Crop Revenue Election (ACRE) programmes have been replaced by the Stacked Income Protection Plan (STAX). STAX provides premium subsidies to upland cotton producers to purchase insurance policies that cover “shallow” revenue losses, those below the level generally covered by standard crop insurance policies.
The Chinese government will be implementing a target price programme for cotton in Xinjiang. Due to the lack of support for cotton grown in the inner provinces, the area outside of Xinjiang is expected to decline in 2014/15, and China’s overall area is expected to decline by 9% from last season to 4.2 million hectares, according to the International Cotton Advisory Committee.
Chinese has not clarified how it will handle the significant stock that it already holds, but the ICAC expects that it will aim for a slow, controlled release.
In 2013/14, world area is estimated at 33.1 million hectares and is expected to remain fairly stable in 2014/15 at 33 million hectares.
World production is forecast to be 25.7 million tons in 2013/14, a decrease of 4% from last season, and is expected to fall again in 2014/15 by 1% to 25.3 million tons. World cotton mill use is projected to rise by 1% this season to 23.6 million tons and by 3.5% in 2014/15 to 24.4 million tons due to continued economic growth in Asia, where much of the cotton consumption takes place. Production is expected to exceed consumption for the fifth season.
The International Cotton Advisory Committee is an association of governments of cotton-producing and consuming countries.
