Transcript Global Cotton Baseline 2012/13 - Department of Agricultural and

Cotton Economics Research Institute
Policy Modeling Group
Darren Hudson, Director
Maria Mutuc, Post-Doctoral Research Associate
Don Ethridge, Professor Emeritus
GLOBAL COTTON OUTLOOK
2012/12 – 2022/23
Cotton Economics Research Institute
Department of Agricultural and Applied Economics
Texas Tech University
Lubbock, TX 79409
Telephone: 806.742.2821
Email: [email protected]
http://www.ceri.ttu.edu/policy
Funding provided by the USDA/CSREES
EXECUTIVE
SUMMARY
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
ECONOMIC FUNDAMENTALS
– Global growth is projected at 3.2% in 2012, to remain at 3.0% from 2013-2018
and slowdown to 2.5% from 2019-22. This growth of 2.8% over 2013-22 is
below the long-term growth rate of 3.7% from 1995-2008.
– U.S. growth is expected to slowdown from 2.1% in 2012 to 1.8% in 2013 amidst
a large output gap that emerged from the 2008-9 crisis.

COTTON MILL USE
– Mill use is projected to grow by about 32 million bales over the next ten years
beginning 2012/13.
– Mill use is projected to remain concentrated in Asia. By 2022/23, the
nations/regions that are projected to lead the world in cotton mill use are (share
of world mill use in parentheses): China (34%), India (23%), Pakistan (13%),
Turkey (5%), Brazil (3%), and Bangladesh (4%).

COTTON PRODUCTION
– As productivity gains have slowed for the time being, yield growth is projected to
decelerate from 2012/13 to 2022/23, growing by 0.5% per year. This annual gain
is lower than the long-term average yield gain of 1.43%.
– World cotton production is projected to increase from 118 million bales in
2012/13 to around 138 million bales in 2022/23. This growth is lower than longterm average of 2.1% in the absence of new yield-enhancing technologies and
flat acreage.
– By 2022/23, leading producers of cotton are projected to be (share of world
production in parentheses): India (26%), China (23%), United States (12%),
Pakistan (9%), and Brazil (6%).

WORLD COTTON TRADE
– World cotton trade is projected to contract in 2012/13 and 2013/2014 as
emerging markets fail to take up the slack in these years.
– From 2014/2015 throughout the projection period, world trade is projected to
grow steadily at 3.8% on average - slightly below the 4.1% growth in the last 10
years. It is projected to increase from 38 million bales in 2012/13 to 49 million
bales in 2022/23.
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China is projected to account for 31% of world imports along with (world import
share in parentheses) Bangladesh (11%), Turkey (7%), and Pakistan (10%) by
2022/23.
The United States is projected to remain the world’s leading cotton exporter in
2022/23 with a 29% market share. Increased competition in the export market
(with projected export market share in parentheses) will come from India (12%),
Brazil (13%), Australia (10%), Uzbekistan (6%), and WCA (9%).
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GLOBAL AND U.S.
OUTLOOK
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MACROECONOMIC PROJECTIONS
REAL GDP GROWTH: ADVANCED
& EMERGING/DEVELOPING COUNTRIES

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Global growth is projected at 3.2% in
2012, slightly improving to 3.4% from
2013-2018 and slowing to 2.5% from
2019-22. This is below the average rate
in 1995-2008 (3.7%).
Growth in emerging and developing
economies is also expected to slow to
3.2% in 2012 as the world economy
remains sluggish.
Growth in advanced economies is
projected to slow to 1.2% in 2012 with
some recovery at 1.8% over 2013-18.
REAL GDP GROWTH: MAJOR COTTON
PRODUCING COUNTRIES
 Economic recovery in the U.S. will
remain fragile in 2012 with growth at
2.1% as demand growth continues to
be uncertain.
 China’s and India’s GDP growth is
expected to correspondingly decelerate
in 2012 to 7.8% and 5.5%, and in 2013
further fall to 6.9% and 4.7% as their
economies mature.
 Brazil’s economy is projected to grow at
1.7% in 2012, lower than the 2.7%
growth in 2011.
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WORLD COTTON PRODUCTION
& COTTON MILL USE

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Mill use is projected to grow by about
32.2 million bales over the next ten
years beginning 2012/13.
World cotton production is projected to
increase from 118 million bales in
2012/13 to around 137 million bales in
2022/23. This growth is lower than longterm average of 2.1% in the absence of
new yield-enhancing technologies and
flat acreage.
WORLD COTTON HARVESTED
AREA & YIELD
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Minimal fluctuation in cotton acreage is
projected in the next ten years with
harvested area increasing from 84
million acres in 2012/13 to 92 million
acres by 2022/23.
As productivity gains have leveled off for
the time being, yield growth is projected
to decelerate from 2012/13 to 2022/23,
growing by about 0.5% per year. This
annual gain is lower than the long-term
average yield gain of 1.43%.
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WORLD COTTON TRADE

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
World cotton trade is projected to contract
in 2012/13 and 2013/2014 as emerging
markets fail to take up the slack in these
years.
From 2014/2015 throughout the
projection period, world trade is expected
to grow steadily at 3.8% on average slightly below the 4.1% growth in the last
10 years. It is projected to increase from
38 million bales in 2012/13 to 49 million
bales in 2022/23.
China’s import levels are anticipated to
be around 12 million bales per year from
2012/13 to 2022/23 – close to 2010/11
import level.
WORLD COTTON PRICE &
STOCKS-TO-USE RATIO

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Following large upward corrections in
2012/13 and 2013/14, the stocks-to-use
ratio is projected to decline to 40% in
2022/23.
As countries gradually shake off their
excess ending stocks in the absence of
large adjustments in consumption and
production, the world cotton price (Aindex) is relatively flat - projected to lie
within a narrow range of 82¢-93¢ from
2012/13 to 2022/23.
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U.S. : PRODUCTION, EXPORTS
& MILL USE
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Following slightly higher production in
2012/13, cotton output in the U.S. is
projected to average at 15.6 million
bales for the rest of the projection
period.
Cotton exports are projected to remain
below 15 million bales per year
through 2022/23, moving from 17
million bales in 2012/13 to 14.7 million
bales in 2022/23.
Cotton mill use is projected to average
3.1 million bales a year from 2012/13
to 2022/23 – below the long-run
average of 3.7 million bales.
U.S. : HARVESTED AREA
& YIELD
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Over the projection period, cotton
acreage is projected to be around 8.8
million acres.
National average cotton yield was 1.65
bales per acre in 2012/13. It is
expected to grow minimally by 0.4%
per year thereafter until 2022/23.
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WORLD COTTON TRADE
& U.S. EXPORTS


World cotton trade is projected to be 32
million bales in 2012/13 and increase
steadily to only 48.5 million bales in
2022/23 as long-term global growth slows
down following structural adjustments in
maturing economies such as Brazil,
China and India.
Exports from the United States are
estimated to account for about 32% of
world cotton trade in 2012/13. This share
is projected to be maintained at 29% for
the next ten years.
SHARE OF WORLD COTTON
PRODUCTION: 2022/23
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Over the next ten years, the share of
world cotton production of major cotton
producers is projected to stay close to
2012/13 levels. However, India is
projected to eclipse China as the largest
cotton producer. The U.S. is projected to
remain as the third leading producer after
China.
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MAJOR GROWTH
MARKETS
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CHINA: COTTON IMPORTS
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CHINA: COTTON PRODUCTION
& MILL USE
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China’s imports of cotton are projected to
drop by about 50% in 2012/13 as a
result of rising inventories following
government purchases to support
domestic prices and incomes.
Thereafter, imports are projected to grow
by a modest 2.5% per year through
2022/23 and maintain an average of
about 12.3 million bales of imports per
year.
As wages have risen by as much as
20% each year from 2002, the cost of
textile production in China has increased
and textile expansion has slowed with
some mills relocating to Bangladesh,
Vietnam, and other Asian countries.
Chinese mill use growth is projected to
decelerate, picking up only 10 million
bales from 2013/14 to 2022/23 after
dropping by 7% in 2012/13.
Cotton production is not anticipated to
increase significantly and is projected to
be 31 million bales per year, on average,
from 2012/12 through 2022/23.
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INDIA: COTTON MILL USE
& IMPORTS
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A sustained growth in the cotton textile
industry is projected to increase cotton
mill use by an average of 4.2% through
2022/23. This growth is lower than the
5% average increase over the past
decade (2002-11) due to weaker global
outlook in the next few years.
However, imports of cotton will initially
increase in 2012/13 as production is cut
back. Thereafter, imports steadily
decline due to India’s production
increases in the next 10 years.
BANGLADESH: COTTON
MILL USE & IMPORTS
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Cotton mill use in Bangladesh is
projected to rebound to 3.6 million bales
in 2012/13 and reach 5.3 million bales
through 2022/23, growing by 4.7% per
year, sustaining its position as one of
the main textile expanding countries in
the world.
With low production, most of the cotton
mill use will be sourced from imports.
The U.S. is a leading supplier of cotton
to Bangladesh but faces competition
from India, Australia, and African
countries.
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VIETNAM: COTTON MILL USE
& IMPORTS

Following the same pattern as
Bangladesh, Vietnam’s cotton imports
are projected to increase by 53% (to 3
million bales) through 2022/23, growing
by 6% per year, to support their textile
expansion. This growth is driven by
China’s textiles becoming relatively
more expensive.

A modernizing and expanding textile
industry in Pakistan is projected to
boost cotton mill use by around 6
million bales from 2012/13 through
2022/23.
From 2012/13 through 2022/23, cotton
area is projected to increase by 14%,
to 8.5 million acres. Although Bt cotton
has not been officially adopted in
Pakistan, unofficial numbers indicate
that Bt cotton is grown on over half of
total cotton acreage.
PAKISTAN: COTTON MILL USE
& PRODUCTION
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DECLINING/STAGNANT
MARKETS
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TURKEY: MILL USE,
PRODUCTION & IMPORTS

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As textile producers gain more access to
the markets within the Commonwealth of
Independent States (CIS) in the latter half
of the projection period, mill use is
projected to recover as well. Mill use is
projected to increase to 7.5 million bales
in 2022/23.
Production is projected to increase by
only 1.6 million bales through 2022/23
following a decline in 2012/13 as
productivity gains level off in the second
half of the projection period.
MEXICO: COTTON MILL USE
& IMPORTS
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Mill use in Mexico is projected to slowly
pick up through 2022/23 with the textile
industry absorbing only 469,000 bales
from 2012/13 (as they continue to face
tougher competition from Asia in the next
several years).
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SOUTH KOREA, TAIWAN
& JAPAN: COTTON IMPORTS

South Korea, Taiwan, and Japan
continue to experience steep declines in
cotton imports - from a combined 2.6
million bales in 2012/13 down to less
than a million bales by 2022/23 amidst a
shrinking textile sector in these countries.

The overall decline of the spinner and
textile industry in the EU is projected to
continue.
EU: COTTON PRODUCTION
& MILL USE
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MAJOR COMPETITORS
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INDIA: COTTON TRADE
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India became the second largest cotton
producer in the world in 2006/07 and is
expected to surpass China as the
leading cotton producer by 2022/23.
India is also projected to be the world’s
second largest exporter over the
projection period with exports growing
by 4% per year from 2013/14 through
2022/23 following a large decline in
2012/13.
INDIA: COTTON HARVESTED
AREA & YIELD
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Harvested cotton area in India is
projected to increase, rising by 17.7%
(5 million acres) from 2012/13 to
2022/23 – below the 59% growth in
acreage (11.2 million acres) from 2002/3
to 2011/12.
Yield gains over 2012/13 to 2022/23 are
projected at 1.2% per year - below the
long-term average of 3.6% on account
of mature Bt technology (over 86% of
national cotton acreage is already
devoted to Bt).
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BRAZIL: COTTON EXPORTS
BRAZIL: COTTON PRODUCTION
& MILL USE

After declines in Brazilian cotton exports
in 2012/13 and 2013/14 as a result of
tepid demand from China, subsequent
growth is projected to be limited to 15%
per year, considerably weaker than the
20% average in the last 10 years, as
global consumption slows.

Production gains will come from both
increased acreage and yields. Cotton is
projected to remain as a favorable
second crop grown in rotation with
soybeans or corn. Acreage is projected
to average 2.7 million acres per year from
2012/13 to 2022/23 – same as the longterm average from 1991/92 to 2009/10
(2.7 million acres).
Yields are projected to increase to 2.6
bales per acre through 2022/23.
Mill use is projected to grow steadily but
slowly (~ 1% per year) as Brazil’s textile
industry mimics the growth in global
consumption.
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UZBEKISTAN: COTTON EXPORTS

Cotton exports of Uzbekistan will remain
steady at around 2.9 million bales per
year over the projection period; they are
projected to account for 6.5% of world
cotton trade in 2022/23.

As a group, the WCA region (Benin,
Burkina Faso, Chad, and Mali) is
projected to account for 8.8% of world
cotton exports in 2022/23.
With a relatively small textile industry,
cotton exports are an important
component of economic development in
the region.
Projections are for approximately 0.2
million bale increase in both production
and in exports per year through
2022/23.
WEST CENTRAL AFRICA:
COTTON EXPORTS
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AUSTRALIA: COTTON EXPORTS
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Exports are anticipated to increase from
2012/13 to 2022/23 due to sustained
production coupled with high carryover
stocks.
Resumption of significant cotton
production and exports is contingent on
greater water availability.
Following significant acreage declines in
2012/13 and 2013/14, production is
projected to pick up by around 1.7 million
bales from 2014/15 through 2022/23
while exports increase by roughly a half a
million bales over the same period.
OTHER AFRICA: COTTON MILL
USE, PRODUCTION & EXPORTS
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Other Africa Region (Cote d’lvoire,
Nigeria, Zimbabwe, and others) is
projected to export as much as 2.5 million
bales by 2022/23, up from 1.7 million
bales in 2012/13.
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MAIN POINTS
The global outlook for cotton remains less optimistic than baselines in years prior to the
2008-9 crisis as a result of a weaker global economy in the years ahead as advanced
countries continue to work on narrowing current output gaps and deficits and as emerging
economies mature together with recent developments in the sector:
 As productivity/yield gains have leveled off temporarily for the next several years
(given technology expectations) and with acreage responding to lower cotton/grains
prices (with some acreage shifts in some countries such as China), growth in
production is slowing.
 As countries continue to shake off excess stocks in the next few years, more
significantly in China, and no drastic change in production and consumption, cotton
prices are projected to decline in 2012/13 and 2013/14 and to steadily increase to 93
cents in 2022/23.
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