The USDA estimates global cotton production to grow by 1.7 per cent year-on-year from August to July 2016 to 23.7 million tons – a downward revision from the previous month’s estimate of 2.5 per cent growth. Meanwhile, the consumption estimate has also been significantly lowered from almost 25 million tons (2.8 per cent growth year-on-year) to 24.7 million tons (1.7 percent growth).
Accumulation of yarn stocks, lower yarn margins, and uncertainties regarding income growth in developing countries are “indicative of the challenges currently facing global cotton consumption,” says the report. Most of the blame falls on China.

China is the world’s foremost consumer of cotton and cotton yarn, and the primary export destination for a lot of developing countries including Pakistan. Recently, China made the decision to limit its cotton yarn imports and dig into its own stocks – Chinese cotton imports are expected to be an astounding 31 per cent lower in MY16, while consumption is expected to remain constant.

Chinese cotton production is also expected to be an estimated 15 per cent lower as compared to last year’s. With that said, India is expected to officially overtake China as the world’s foremost producer of cotton this marketing year, and a paradigm shift might be in the offing.

As for Pakistan, the USDA has revised down the production outlook by around 0.3 million bales to a decline of 5.7 per cent year-on-year, as opposed to last month’s estimate of 3.7 per cent decline. Previously, the government of Pakistan set a highly optimistic target of around 15.5 million bales, after the record production of over 14.8 million bales seen last year. However, due to heavy rains and floods destroying crops in the early days of August – not to mention growers missing the sowing target – the production target has been lowered to 13.3 million bales.

www.usda.gov