Early Forecast Wrong: Lower 2013/14 Prices Due to Changed World Situation
December 5, 2013 In April 2013, the ICAC Secretariat’s projected price for the current season was 118 cents per pound. But since then, the projected price has dropped precipitously, with the current midpoint of the forecast range at 88 cents.
China’s reserve and import policies have weighed heavily on international prices. So far in the 2013/14 season, the China National Cotton Reserves Corporation (CNCRC) has purchased more than 2.7 million tons, and its total cotton reserves have passed 10.1 million tons.
On November 26, CNCRC announced that it would begin selling 2011 cotton at a price of $1.33/lb from its reserve on November 28, 2013. Although there is no announced volume of sales from the reserves, the ICAC Secretariat is assuming that CNCRC will sell roughly 2-3 million tons.
In the past two seasons, China imported much of the surplus stock on the world market, keeping prices relatively high.
This season, its imports are expected to decrease 40% to 3.1 million tons. The sales price of cotton from China’s reserve is significantly higher than the import price, even after the 40% tariff. As a result, unless international prices rise above the mid-90-cent level, China’s imports are projected to remain around 3.1 million tons for the season.
As was the case for the last three seasons, 2013/14 world production is expected to outpace world consumption with 2013/14 world production projected at 25.6 million tons, down by 1.2 million tons from last season. World cotton consumption is forecast at 23.8 million tons in 2013/14, up 2% from last season with an upward revision of 85,000 tons in India from last month.
GET THE NEWSLETTER TODAY!
