Cotton plantings on Northern Hemisphere for the 2012/13 season will start in a few months. The sharp drop in cotton prices in the current season is reducing farmers’ incomes and decreasing for the first time in three years the attractiveness of this crop when compared to that of its main alternatives. In addition, agricultural production costs have increased since 2011/12 plantings. As a result, cotton area in many countries is expected to decline in 2012/13.
ICAC projects global cotton area to contract by 8% to 33.2 million hectares and production to decrease by 7% to 25 million tons. If cotton prices decline further over the next few months, this might translate into a larger decline in cotton area and production in 2012/13. Cotton harvested area is expected to decline in 2012/13 in most large producing countries, including China, India, Pakistan, Brazil, and Turkey. Three exceptions are the United States, Uzbekistan, and Australia.
After two seasons at depressed levels, global cotton mill use is forecast to start growing again in 2012/13.This expectation is highly dependent on the assumption of a recovery in global economic growth that would stimulate purchases of textile products and consumption of raw fibers. Global cotton mill use could rise by 3% in 2012/13 to 25 million tons. Rising mill use and lower cotton prices could fuel a rebound in world cotton trade in 2012/13. Imports are expected to jump by 10% to 8.4 million tons.