Good News for the World Economy: Cotton Markets Should Level Off in 2025
NEW YORK – Cotton may not always be a leading indicator for the global economy, but a new report from Cotton Incorporated suggests there is a relationship between the two and both are headed in the right direction for 2025.
In its recently released special study, “Cotton as a Potential Bellwether for Global Economies: Why International Cotton Markets Matter,” a sister organization of Supima reports that “the overall economic outlook (in the U.S.) is favorable, and the cotton pricing outlook is moving in a positive direction.”
Cotton Incorporated is forecasting more stability in cotton pricing for the new year, stating that “pricing bottoms should be fairly close in terms of fiber prices. The outlook suggests a more stable macroeconomic environment, following continued volatility since the start of the trade dispute and the spread of COVID-19.” Cotton Incorporated has provided estimates of how each of the major cotton-producing countries around the world see their crops for 2025. The US Department of Agriculture expects to see an increase in global production (+3.1.2 million bales to 116.2 million) and world mill-use (+1.4 million to 115.2 million) in 2024/25. "The biggest year-over-year increase is expected to come from the US, which saw an increase of about 2.5 million bales more than last year. But this increase only seems so large because in 2023, the US market sees its smallest crop since the 1980s."
Weather has been the main culprit for the smaller crops, with hot and dry conditions in West Texas, the country's largest producing region.
China remains the world's largest cotton producer, and its production last year rose by 300,000 bales to 27.8 million, the report said. China also has reserve stocks brought in last year, which will keep the country's market well supplied in the 2025 season. This means that China is reducing its imports by 500,000 bales to 9.5 million.
India is the world's second-largest cotton producer and the report said the country has also had weather-related issues in the last few months and its crop numbers are falling.
"However, for the last several years India has guaranteed minimum support prices (MSPs) to producers. When prices were high and above the guaranteed price, this was not a problem. But now that prices are low, the Indian government will need to intervene, as MSPs are enforced by the government. This also means that the government will take possession of the cotton and keep it out of the market. But unlike China, where cotton can be stored for years, storage in India is usually only for a period of a few months. Cotton may come back to the market, but may be sold at a loss." Cotton production in Pakistan, the fourth-largest producer, fell by 300,000 bales to 5.7 million, but its spot prices rose from $0.76 to $0.81 a pound. “Pakistan has had problems with its cotton seeds. They don’t have the best controls, so they’ve lost that security over time. They’ve also had problems with flooding. And overall Pakistan’s financial situation is not great. Also, the weather has been so hot that it’s been about 120 degrees at times this year. So, they have challenges on a number of fronts.” The wild card for 2025 could be Brazil, which grew a record crop last year and has the advantage of planting two crops a year because of its tropical climate.
The U.S. cotton crop for 2025 will be planted in April and more accurate forecasts are likely at that time. But cotton should be more stable in the coming year based on the most recent forecast models.
read more :- Cotton cultivation in Punjab, Haryana and Rajasthan fell by 31%, yield expected to fall by 38%
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