World cotton area could fall slightly from the year before in 2007/08 as a large decline in U.S. harvested area is not offset elsewhere in the world. Australia is likely to increase its cotton area thanks to reservoir replenishment, and a return to more normal weather in West Africa would also suggest larger cotton plantings. But China’s prospects now suggest a slight decline in cotton area, and India’s substantially larger area is likely to increase marginally if at all.
World cotton production is expected to fall, down 2 percent to 118 million bales as smaller crops in the United States and China are partially offset elsewhere. In addition to more normal weather in Australia and West Africa, factors helping to stabilize cotton production in the face of weak relative cotton prices include the prospect for further yield gains in India with the spread of genetically modified cotton and the strong consistency of production in Uzbekistan and Central Asia. Central Asian production has varied about 2 percent annually over the last 4 years. Consumption is likely to grow about 2 percent globally from the year before in 2008/09. While this is twice the rate expected in 2007/08, it remains significantly below the 5 percent average of the previous 5 years. World economic growth dipped in 2008 from an unusually strong 4 year period. During 2003-07, the global economy expanded 4.8 percent annually on average, a full percentage point above the previous 10-year average. For 2008, the International Monetary Fund has estimated growth will slow to 3.7 percent, and in 2009 only 3.8 percent growth is expected.
Relative fiber prices are also constraining growth in world cotton consumption. While cotton prices have risen less than the prices of the crops that have supplanted it in farmers’ planting decisions this year, polyester prices have risen by an even smaller amount. Relative to polyester, cotton has reached its highest since 2003/04, increasing the risk that cotton will again see its share of world fiber consumption begin to slip.
World ending stocks are forecast lower than the year before in 2008/09, down 6 million bales, at 55.6 million bales. Most of that decline is expected to occur in U.S. stocks, but China’s stocks are forecast 2 million bales lower. Excluding China’s stocks, ending stocks as a share of world consumption are expected to fall from 35 percent in 2007/08 to 31 percent. This would be the lowest share since 2003/04.
Source: USDA