Exports of Indian cotton fall 50%
17/08/2015
From 2010/11 through the end of 2014/15, the world has accumulated 13.4 million tons of stock due to production exceeding consumption.
In 2015/16, stocks are projected to decrease 5% to just under 21 million tons, reducing the excess volume by around 1 million tons.
Much of the world’s excess stock is held by the Chinese government from purchases made by the China National Cotton Reserve Corporation under its stockpiling policy from 2011-2014. The Reserve made its final purchases of the 2013/14 crop in March 2014 with sales continuing through August 2014, ending with an accumulated volume of around 11.3 million tons.
On July 10, the Chinese government started to sell its stockpiles at prices close to the current domestic market price in the hopes of maintaining market stability. The cumulative volume of cotton sold through the end of July is around 40,000 tons.
India’s stocks are estimated at 2.2 million tons in 2014/15, which is the second largest volume of stocks. Part of the increased volume is held by the Indian government, which procured stocks under its minimum price support program. Government purchases in 2014/15 are estimated at around 1.5 million tons, and sales through the end of July at around 650,000 tons. However, exports from India have fallen by 51% to 980,000 tons, also contributing to the build-up of stocks.
World consumption is projected to rise by 2% to 24.9 million tons in 2015/16. China’s consumption is forecast to remain stable at around 7.7 million tons. However, mill use is expected to grow in the next four largest consuming countries.
World cotton trade is expected to remain stable at 7.7 million tons in 2015/16.
Earlier this year, the Chinese government limited import quota to the volume required under WTO rules of 894,000 tons, in part to spur demand for domestic cotton and reserve sales.
Given the large volume of stocks within China, it will likely maintain the restricted import volumes through 2016, and China’s imports could fall 10% to 1.6 million tons in 2015/16. Imports outside of China are forecast to increase by 4% to 6.1 million tons.
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