While cotton prices are down in 2012/13, those of major competing crops (maize, soybeans and wheat) are significantly up. As a result, the attractiveness of cotton at the farm level is continuing to erode. The Secretariat (ICAC) projects global cotton area to contract by 9% to 31.5 million hectares and production to decrease by 11% to 23.2 million tons. Production is projected only slightly down in India. Australian production could decrease by 14% if dryness returns. Planting intentions for 2013/14 will likely change over the next few months, depending on final farmers’ returns from the 2012/13 crop and evolving commodity price relationships. Global cotton mill use is expected to continue growing slowly in 2013/14, on the basis of a timid recovery in global economic growth. However, a small gain in cotton prices could constrain the increase in demand for cotton. The Secretariat forecasts global cotton mill use to rise by 3% in 2013/14 to 24.2 million tons, driven by South Asia. Cotton mill use in China, the largest consumer, is projected down by 2% to 8.4 million tons. In contrast, cotton mill use in
India and Pakistan could grow significantly, driven by ample supply of cotton in the region and lower yarn production costs. World cotton trade could remain almost stable at 7.8 million tons in 2013/14, as an expected further drop in Chinese imports could be offset by increased demand from the rest of the world. The Secretariat assumes that China will import less cotton in 2013/14 than needed to fill the gap between consumption and production, and that the national reserve will contract slightly to make up for this difference. Import demand from Turkey, Bangladesh and Pakistan is expected to grow significantly.