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Cotton Council Releases Outlook Report

Cotton in Arizona. Photo by Sabrina HillEconomists with the National Cotton Council released a report showing a few key factors that will influence the cotton industry’s 2018 outlook. Cotton prices have maintained a strong appearance in spite of an increase in global production. The current supply and demand fundamentals do appear bearish. However, strong U.S. export sales, a weaker U.S. dollar, heavy speculative buying, and large mill fixations have supported prices. Looking ahead to the coming year, projections of record ending stocks in China may bring pressure on world cotton prices. The longer-term outlook points to some positive factors over the next few years. The world economy is improving. World cotton demand is on the rise, with estimates calling for an increase of five percent in 2017, more than doubling the previous five-year average. China is expected to hold their next round of reserve auctions this month. A successful auction series this year might make China a large importer of cotton again. World mill use is expected to exceed world production in the 2018 marketing year, with global stocks projected to decline by 5.4 million bales. On the domestic side, 2017 U.S. mill use is estimated at 3.4 million bales, 100,000 higher than the previous year. The NCC is projecting a modest increase in mill use totaling 60,000 bales in 2018.