International cotton stocks — with the exception of China — are expected to rise by approximately 12 million bales to touch a record high of 53 million bales during the 2017-18 season, predicts the US department of agriculture (USDA). Despite a relatively strong forecast of 3.8 per cent increase in global cotton use, a 15 per cent hike in production will outpace demand and increase global stock which will result in buyers gaining an opportunity to procure cotton at competitive prices.

An October 2017 report on cotton released by the Foreign Agricultural Service of the USDA notes, “China’s cotton import policy remains a major wildcard. Despite market rumours of possible increased import access, there has been no official indication of any change in the import policy. Therefore, 2017-18 imports are forecast at a similar level to last season.”

While the additional cotton stocks will be spread across nearly all markets, major exporters will face the burden of high stock inventory with Central Asia, Africa, the Southern Hemisphere and the US forecast to see their stock levels rise way above average.

In South Asia, cotton stocks are projected to grow as production increases three times as much as the region’s growth. Here stocks are expected to be at unusually high levels, largely in India, the major exporter.

“If Bangladesh is able to repeat past peak growth rates, it could reduce some of these stocks, however, USDA’s forecast already assumes a relatively high growth rate for use and is unchanged this month,” the report notes.

Cotton stocks-to-use ratios will be above recent levels even in import-dependent regions such as Southeast Asia. As exporters work aggressively to reduce inventory levels, resulting in some of the increased global stocks being held in mills, warehouses, and other locations across the world.