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World cotton stocks to rise in 2017-18. But by how much?

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Something else for cotton investors to chew on – growing supply prospects.


Both the International Cotton Advisory Committee and private consultancy Cotlook on Friday raised estimates for world production of the fibre in 2017-18, on an August-to-July basis.


The ICAC raised its forecast by 190,000 tonnes (873,000 bales) to 25.57m tonnes, while Cotlook lifted its estimate by 168,000 tonnes to 26.03m tonnes.


“A considerable reduction for Pakistan is more than offset by an expectation of increased output in several major producing countries, including India, China and Brazil,” UK-based Cotlook said.


Rising supplies


The data speak of an even bigger rise in world stocks that had been previously expected.


The ICAC upgraded its estimate for world cotton inventories at the close of the season in line, to 18.89m tonnes – growth of 343,000 tonnes year on year.


Cotlook sees an even more substantial growth in stocks, of 841,000 tonnes.


The US Department of Agriculture, meanwhile, for reference,remains stuck in the middle with an expectation of growth of 2.81m bales (611,800 tonnes).


Focus of debate


One of the main sources of disagreement is over Indian production prospects, which the ICAC sees at 6.03m tonnes, but the ICAC 10% higher, at 6.63m tonnes.


The USDA is in between, at 30m bales (6.53m tonnes).


On the other big number in world cotton, Chinese consumption, they are a bit closer, with the ICAC at 8.12m tonnes, Cotlook at 8.36m tonnes and the USDA at 38.5m bales (8.38m tonnes).


It looks like an extra reason why cotton investors may, once the immediate issue over US wether is past, keep a close eye on India, besides the potential for a raised minimum support price there to erode the competitiveness of its exports.

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