Low Cotton Prices Trigger Govt Support Measures: ICAC

Low cotton prices trigger govt support measures: ICAC

 

Global cotton prices which have plummeted in recent months, has triggered ‘Minimum Support Price’ measures from governments of large cotton producing countries, says ICAC.

In 2013/14, the Cotlook A Index averaged 91 cents/lb, well above the long-term average of around 70 cents/lb.

However, prices have since plummeted, and the ICAC Secretariat has forecast world average price to be around 74 cents/ lb this season.

“Given low prices and high production costs, many governments of large cotton-producing countries are taking measures to help growers,” ICAC informs.

China recently announced that it would provide a cotton subsidy of 2,000 Yuan/ton to growers in nine inland provinces in 2014.

India has a minimum support price system that did not go into effect in the last few seasons due to high prices, but prices have fallen enough to trigger the minimum support price this season.

In October, the Pakistani government announced a cotton support price of Rs 3,000 per 40 kilograms.

The Trading Corporation of Pakistan (TCP), which has not purchased cotton since 2005/06, will buy about one million bales of lint this month at the announced minimum support price.

World cotton production is forecast at 26.3 million tons for 2014/15, an output similar to that of last year.

While harvesting in India will likely continue into early next year, production is expected to remain stable at 6.8 million tons.

The less favourable monsoon weather lowered the average Indian yield to around 553 kg/ha and offset a 4 per cent gain in acreage.

China’s production is forecast to be down 7 per cent to 6.5 million tons due to a smaller area sown with cotton.

While rains during planting, alleviated the drought situation in the United States, allowing production to recover to 3.6 million tons.

Despite the flooding in Pakistan last month, cotton production is projected to rise 1 per cent to 2.1 million tons with an average yield of 750 kg/ha.

World cotton consumption is likely to pick up next year reaching 24.4 million tons by the end of 2014/15.

China’s total consumption is expected to be just under eight million tons, and India to be around 5.3 million tons.

Consumption in Pakistan may grow 2 per cent to 2.3 million tons, but will depend on sufficient and stable electricity supply in the regions with the highest concentration of spinning mills.

Bangladesh consumption is projected at 954,000 tons while Vietnam is expected to consume nearly 700,000 tons of cotton, up 9 per cent from 2013/14.

World trade is projected to fall 11 per cent and reach 7.9 million tons and to promote consumption of domestically grown cotton, the Chinese government is limiting the volume of cotton imports.

Chinese cotton imports are forecast to drop 36 per cent to 2 million tons in 2014/15.

However, imports elsewhere are expected to grow 8 per cent to 5.9 million tons, due to gains in South and Southeast Asia, where many consuming countries produce small quantities of cotton. (AR)