As per National Cotton Council economists, 2016 will be another challenging year for the US cotton industry – with low cotton prices, ample global stocks and uncertainties regarding global mill cotton use. Addressing NCC's 78th Annual Meeting in Dallas, Texas, Jody Campiche, the NCC's vice president, Economics & Policy Analysis said that, while world mill use is expected to exceed world production in 2016, global cotton stocks remain at high levels.

Regarding domestic cotton mill use, USDA estimates US mill use at 3.6 million bales, up 25,000 bales from 2014 and marking the fourth consecutive year of increased consumption. The Economic Adjustment Assistance Program (EAAP) continues to be an important source of stability allowing mills to invest in new facilities and equipment, but the strength of the U.S. dollar is creating challenges for yarn exports.

Export markets continue to be the primary outlet for U.S. raw fiber. In recent years, US export customers have changed, she observed. China is importing less raw cotton fiber, leading to a reduction in world trade. Campiche said that considering the massive stockpiles of cotton and expectations for limited quota, China's imports are expected to fall further in 2016 to 4.75 million bales, down from 5.5 million in 2015.

Meanwhile, India is projected to continue as the world's largest cotton producer and the second largest exporter in 2016. Indian cotton producers continue to receive support through fertilizer subsidies and the Minimum Support Price (MSP) program. In addition, India will begin a pilot program in 2016 that could eventually replace the current MSP with a direct farmer subsidy programme.