Global Cotton Production and Consumption to Expand in 2011/12

The first U.S. Department of Agriculture (USDA) cotton forecast for 2011/12 projects growth in both world cotton production and consumption, with production exceeding consumption for the first time in 7 years. Global production is forecast to rise to a record of about 125 million bales, 10 million above 2010/11. The nearly 9-percent growth rate for 2011/12 pushes the anticipated crop nearly 12 million bales above the 5-year average. Cotton production in 2011/12 is forecast to increase in most of the major producing countries, led by India, China, and Pakistan.

World cotton consumption for 2011/12 is projected at 119.5 million bales, 3 million higher than 2010/11 and the largest since 2007/08. Growth similar to the long-term average is supported by improving global economic conditions, cotton product demand in developing countries, and the expectation of a bumper crop. Cotton mill use in 2011/12 is forecast to expand in the major consuming countries, led by China and India.

Global cotton production and consumption

World Cotton Production Forecast at Record High in 2011/12

World cotton production in 2011/12 is forecast at 124.7 million bales, up 9 percent from the previous year, as producers respond to a strong market price for the fiber. If realized, the 2011/12 crop will be biggest on record and the third consecutive annual production increase. Global harvested area is forecast at nearly 36.0 million hectares in 2011/12, a 7-percent increase from a year ago. Global yields in 2011/12 are forecast to increase 2 percent from the preceding year, to 755 kg/ha. Substantial production increases are forecast for China, India, Pakistan, Turkey, and Mexico, which together are expected to account for at least 80 percent of the crop increase.

China´s 2011/12 crop is forecast at 33.0 million bales, up 8 percent from the previous year. Despite farm labor constraints, high input costs, and more favorable Government support for grains, producers in China are expected to respond to prevailing strong cotton prices which remain above the levels obtained a year ago. China´s harvested cotton area in 2011/12 is forecast to expand 7 percent to 5.5 million hectares from a year ago and the yield is forecast at 1,306 kg/ha. India´s

2011/12 production is forecast at 27.0 million bales, a 13-percent increase from a year earlier and the highest crop on record, on the expectation of normal monsoon conditions. India´s 2011/12 cotton area and yield are forecast to increase 8 percent and 5 percent, respectively, to 12.0 million hectares and 490 kg/ha from a year ago. Pakistan is forecast to produce 10.3 million bales in 2011/12, up 18 percent from the previous year in response to high market prices for the fiber and an expected recovery from last year´s flooding. Area and yield in Pakistan are forecast at 3.3 million hectares and 680 kg/ha, up 14 percent and 4 percent, respectively, from a year earlier. Growers in Pakistan are expected to continue the increased use of Bt seed and better fertilizers in 2011/12. Turkey and Mexico are forecast to produce 2.8 million bales and 1.0 million bales in 2011/12, representing an increase of 33 percent and 46 percent, respectively, from the previous year.

Australia´s 2011/12 crop is forecast at 4.25 million bales, a 3-percent decline from a year earlier. Area and yield are forecast at 525,000 hectares and 1,763 kg/ha, down 75,000 hectares (13 percent) and up 166 kg/ha (10 percent) from the preceding year. Brazil is forecast to produce 9.3 million bales in 2011/12, unchanged from the previous year´s crop estimate. Harvested area in Brazil is forecast at a record 1.4 million hectares, up 1 percent from a year earlier and the yield is forecast at 1,446 kg/ha. In the United States, 2011/12 production is forecast at 18.0 million bales, down 100,000 bales (0.6 percent) from a year ago. Harvested area and yield in the United States are forecast at 4.4 million hectares and 897 kg/ha, representing a 1-percent area expansion and a 1-percent yield decline from the previous year.

The African Franc Zone (AFZ) is forecast to produce nearly 3.0 million bales in 2011/12, up 30 percent from a year ago. Benin, Burkina Faso, Chad, and Mali (the C-4 countries) are forecast to produce 450,000 bales, 900,000 bales, 115,000 bales and 575,000 bales, respectively, together accounting for 68 percent of the African Franc Zone´s 2011/12 crop. Area harvested in Benin, Burkina Faso, Chad, and Mali is forecast to increase 22 percent, 25 percent, 15 percent, and 25 percent to 220,000 hectares, 500,000 hectares, 115,000 hectares, and 325,000 hectares, respectively, in 2011/12.

World Cotton Trade to Rise in 2011/12

World 2011/12 cotton trade is forecast at 39.9 million bales, up 8 percent from a year ago. Exports in the 2011 marketing year are expected to grow in Australia and Brazil. Exports in India are forecast to remain similar to last season, while U.S. exports are projected lower (fig. 3). Australia is forecast to export 4.3 million bales in 2011/12, up 43 percent from a year ago. Brazil´s 2011/12 exports are forecast to increase 125 percent to a record 4.5 million bales from the previous year due to rising output and foreign demand for the country´s fiber. India is forecast to export 4.8 million bales in 2011/12, unchanged from the trade volume in the preceding year as authorities maintain export restrictions on the fiber. The United States is forecast to export 13.5 million bales in 2011/12, a 13-percent decline from a year ago. Exports from the African Franc Zone are forecast at 2.6 million bales, up 25 percent from the previous year. Burkina Faso, the leading exporter in the region, is forecast to export 825,000 bales in 2011/12, up 24 percent from the previous year.

Cotton imports in several major importing countries are expected to rebound in 2011/12. Bangladesh, the world´s second-largest cotton importer, is forecast to import 4.0 million bales in 2011/12, a 4-percent increase from a year ago. China, the world´s leading cotton importer, is forecast to import 16.0 million bales, up 19 percent from a year earlier and the second highest on record. Imports in Indonesia, South Korea, and Turkey are forecast to increase 8 percent, 10 percent, and 3 percent to 1.95 million bales, 1.1 million bales, and 3.5 million bales, respectively, from 2010/11. Pakistan´s 2011/12 imports are forecast to decline 7 percent from the preceding year.

World Cotton Consumption to Rebound in 2011/12

Global mill use in 2011/12 is forecast to rise 2.6 percent from a year earlier, slightly above the long-run average annual growth rate of 1.9 percent. This would bring world consumption to 119.5 million bales, its largest since the global mill use collapse in 2008/09. The global economy is expected to continue growing strongly in 2011 and 2012 as emerging markets maintain GDP growth in excess of 6.0 percent. The International Monetary Fund´s April outlook was for global GDP growth of at least 4.4 percent in both years, exceeding the 3.6 percent average rate over the last 40 years. China´s 2012 GDP forecast, which remains robust at 9.5 percent, is expected to translate into strong domestic demand by the world´s top mill user. In the United States, the largest source of household demand for cotton products, the economic expansion that began in 2010 is expected to continue, with GDP growth approaching 3.0 percent. Income growth prospects are more mixed for the European Union and Japan—but remain positive—and India´s economy is expected to continue growing at more than 8 percent annually.

However, the global increase in cotton consumption is expected to be tempered by relatively high prices for cotton. After a significant jump in 2010/11, cotton prices are expected to fall in 2011/12, but are still expected to be about 70 percent higher than the prices of 2 years earlier. Polyester prices have risen as well during this time, but not to the same extent. The result has been a slowdown in total world fiber demand and slippage in cotton´s share of world fiber consumption. A few years ago—2003/04 through 2006/07—world income gains in the 4-5 percent range were associated with annual cotton consumption increases averaging 6 percent annually. With cotton prices now higher both in absolute terms and relative to competing fibers, global cotton consumption in 2011/12 is expected to grow only slightly more than its long-term average rate.

India´s 2011/12 cotton consumption is forecast at a record 21.5 million bales, an increase of 2.4 percent from a year ago. Except in 2008/09 when the global financial crisis took a toll, India´s mill use has increased each year in the past decade. Pakistan´s 2011/12 is forecast to increase 5 percent to 10.75 million bales from the preceding year. Consumption in Turkey and the United States is forecast at 6.1 million bales and 3.8 million bales, up 3.4 percent in Turkey and unchanged in the United States from the previous year. If realized, the global share of consumption in India, Pakistan, Turkey, and the United States will be 18 percent, 9 percent, 5 percent, and 3 percent, respectively.

Global 2011/12 ending stocks are forecast at 47.9 million bales, up 13 percent from the previous year. Global stocks declined for four consecutive seasons as world consumption outpaced world production. However, production is expected to exceed consumption in 2011/12 in response to record prices in 2010/11. Stocks are forecast to increase in nearly all cotton producing and consuming countries, with the largest increases projected for India (1.2 million bales), China (950,000), the United States (750,000), Pakistan (525,000), and Brazil (450,000). Rising global stocks resulting from a strong output response are expected to temper the world market price for the fiber.