History could soon repeat itself in cotton markets, meaning surprising strength in prices, Macquarie said, saying the fibre looked set to remain an "outperformer" compared to grains – until 2015.
The bank acknowledged the threat to prices from world stocks expected to end the current season at record 86.7m bales, equivalent to more than nine months' supplies.
However, the prospect of China, again, buying from farmers at prices equivalent to 150 cents a pound, nearly double market values, will suspend the risk of crops collapsing under the stocks, until next season, when the bank said its "constructive view disappears completely".
"The fundamentals for the new season are likely to be extremely similar to what we saw in 2012-13 – implying cotton prices should continue to perform well," Macquarie analyst Kona Haque said.
China's commencement, for a further season, of a cotton support programme offering 20,400 yuan a tonne to growers will prompt a further increase in the country's already-huge inventories.
That will continue to encourage Chinese imports, whether of the fibre itself or, by bypassing spinners, of yarn, which is not subject to import duties, for which buy-ins for 2012-13 doubled to the equivalent of 8m bales of cotton.
These purchases in turn will continue to drain cotton supplies outside China, supporting world prices.
"With the Chinese having committed to another season of maintaining a price floor double that of the world, we expect to see demand for the world's cheaper and more freely available stocks lead to a potential tightening in the world outside of China," Ms Haque said.
"During the last two seasons, China supported the cotton prices with significant stockpiling, and we expect the same this season too."
'Sharp drop in US stocks'
Although production in some countries outside China, such as India, will see good harvest, the cotton market in the US, the top exporter, "is tightening".
Besides a drop in sowings this year, US cotton production will also be limited by weather extremes, with periods of excessive inundations in the South East, but drought in parts of Texas, the top producing state.
Furthermore, "it is increasingly likely that the US cotton farmers will finish the harvest late, risking inclement winter weather that could compromise yield and quality", Ms Haque said.
Pegging US cotton exports in 2013-14 at 11.5m bales, 900,000 bales more than the US Department of Agriculture is factoring in, Macquarie forecast the country's inventories falling "sharply" over the season to 1.82m bales.
The USDA forecasts a smaller drop, of 1.0m bales, to 2.9m bales.
'Repeat of calendar 2013'
"Overall, we see prices remaining well supported in the mid-80s cents a pound," Ms Haque said, flagging the potential for a return above 90 cents a pound on scares to Indian or US crops.
And as the market enters 2014, "it is possible we see a repeat of calendar 2013, when prices often rallied on the back of high mill demand.
"We see cotton continuing to be an outperformer compared to the other row crops such as grains."
Cotton futures are the second best performer among major US-traded crop futures this year, behind cocoa.
However, that looks to change for 2014-15, given the likelihood of China, which is reviewing its cotton support policy, of ditching the current mechanism, and the prospect of current high prices encouraging a revival in output.