The International Cotton Advisory Committee stood by a
forecast of world cotton inventories decreasing next season, standing by estimates of a drop in ouput and foreseeing a
slowdown in the "ferocious rate" of stockbuilding by China.
The committee, an intergovernmental group, forecast world cotton
stocks falling by more than 1.2m tonnes over 2013-14, to close the season at
15.8m tonnes (72.4m bales).
While still historically high, if below the record high at which
they are set to end 2012-13, the expectation of a decline contrasts with a
forecast two weeks ago by the US Department of Agriculture that world stocks
would continue their rise next season, to 81.1m bales (17.7m tonnes).
The Washington-based ICAC foresaw a slowdown in the "ferocious
rate" at which China has been stockpiling, with purchases between September and
January estimated at some 6m tonnes, mostly from the domestic market, and
one-third from imports.
China's annual strategy briefing, called "No 1 Central
Document", outlining China's policy priorities, had placed as top priority
ensuring the security of supplies of grain and major farm produce.
"To encourage agricultural production, China will continue
to conduct temporary state reserves of cotton," the ICAC said.
"With a stocks-to-use ratio of 0.97, domestic cotton
consumption is almost secured, an indication that the cotton reserve build-up
could slow down in the coming months," with imports seen slowing nearly to 3.0m
tonnes next season - well under half the 5.3m tonnes reached in 2011-12.
ICAC vs USDA
Nor will inventories swell in the rest of world as China holds
back, with the ICAC, forecasting a 14% drop in world production year on year to
a four-year low of 22.6m tonnes.
Stocks in countries excluding China will fall to some 7.7m
tonnes, equivalent to 48% of use, also a four-year low.
With inventories in China in essence unavailable to the rest
of the world, the ratio of stocks in other countries as compared with demand is
seen as a key indicator of price prospects, although the ICAC stopped short of making
The USDA foresees world cotton production falling by a more
modest 2.9% in 2013-14, including rises in output in Brazil, India and
Pakistan, all countries in which the ICAC forecasts output declines.