USDA Agricultural Projections to 2029 brings out some interesting trends in cotton production and trade.
The USDA report estimates average price for upland cotton to touch US$ 0.72 per pound by 2029, from US$ 0.62 per pound at the start of the projection period, that is 2019.
With US cotton prices higher relative to both corn and soybeans for 2020-29 compared with the previous ten years, farmers are expected to plant 11.8 million acres in 2020/21 and climb to 13.3 million acres at the end of the projection. The average plantings for the projection period are roughly 1 million acres higher than in the prior decade.
US domestic mill use is expected to remain flat at 3.0 million bales over this timeframe while exports are projected to grow, rising from 15.5 million bales to nearly 18.5 million by the final year. US mill use makes up less than 15% of total US disappearance of upland cotton over the projection period. While mill use in the late 1990s was closer to 60% of total US cotton use, increased competition from both foreign manufacturing of cotton and synthetic fibres, such as polyester, have reduced mill use in more recent years.
US cotton export share may fall
US upland cotton export growth is expected to remain strong and trend higher throughout the projection period. The United States remains the largest exporter of cotton, and is expected to export between 15.5 and 18.5 million bales per year over the next decade. With growing international demand and strong export growth expected in Brazil and to a lesser extent in Australia, the US trade share (for all cotton, upland plus ELS) is nevertheless expected to decline moderately from 35% in 2020/21 to 33% in 2029/30.
Even so, global cotton trade increases throughout the projection period, and by 2029/30 is expected to reach 58.4 million bales, according to the USDA report. The projected 27% increase over the projection period to 2029/30 is driven in part by a recovery of China’s imports after completing its disposal of surplus stocks. China’s cotton imports are projected to reach 16.6 million bales by the end of the projection period. Vietnam and Bangladesh are the next two-largest cotton-importing countries. Both are projected to increase imports, adding a combined 6.8 million bales over the projection period.
USDA estimates that China’s ending cotton stocks for 2018/19 were down over 30 million bales from the peak level reached in 2014/15. Cotton imports are projected to rise to 16.6 million bales in 2029/30, up from just 4.4 million bales in 2015/16.
Global cotton imports
China’s rebound in cotton imports is expected to help drive growth in world cotton trade, as world trade volume rises at a 2.7% annual growth rate between 2020/21 and 2029/30. China’s return to a normal level of reserve stocks prompts a resumption of large imports. Projected world cotton trade surpasses the 46.4-million-bale record set in 2012/13 early in the projection period to reach 58.4 million bales in 2029/30. Southeast Asia cotton imports are estimated to increase by 32.5% by 2029/30, reaching 17.7 million bales.
China’s cotton imports are expected to increase throughout the next decade with stronger growth in the first two years of the projection period. China’s cotton imports are expected to expand 5.2% per year during the projection period. China increases imports by about 6.1 million bales, with imports at 16.6 million bales in 2029/30.
While China’s cotton use is expected to increase, shifts in textile production to Vietnam, Bangladesh, and India will increase their shares of global use.
Vietnam is projected to remain the second-largest importer in 2020/21 as its textile industry grows rapidly, with imports reaching 12.1 million bales by 2029/30. Vietnam’s cotton imports increased six-fold over the past 12 years and are projected to account for one-third of the world’s increased imports during the projection period. Vietnam’s textile sector and cotton imports are expected to grow 4.7% annually through 2029/30.
Bangladesh, Indonesia, Pakistan, and Turkey are expected to be the third-, fourth-, fifth-, and sixth-largest cotton importers by 2029/30. Since the early 2000s, China was the largest importer, but Bangladesh became the world’s largest cotton importer in 2015/16. However, China returned as the largest importer once again in 2018/19. Indonesia’s cotton imports surpass Turkey’s import level in 2019/20. Indonesia is the fourth-largest cotton importer throughout the projection period, with projected imports growing 1% annually, and approaching 4 million bales by 2029/30. Turkey’s share of world consumption weakened recently, but imports are expected to increase slightly through the projection period to 3.4 million bales by 2029/30.
Pakistan’s cotton imports are projected to decrease and remain stable near 3.4 million bales. Pakistan’s exports, on the other hand, are projected to slightly increase by 2029/30 to 0.3 million bales. Mexico, EU, Thailand, FSU, South Korea, Taiwan, and Japan all decrease imports slightly throughout the projection period, with a combined decrease of 820,000 bales by 2029/30.
Global cotton production and exports
Raw cotton production is expected to continue moving to countries with favorable resource endowments and advancing production technologies. The expanded cotton output is projected from traditional producers with large amounts of land suitable for cotton production, including Brazil, Sub-Saharan Africa, and India.
The US share of world cotton production has declined from the early 2000s (by 25%) with the spread of new technology around the world; however, throughout most of the baseline period, the US share is expected to remain fairly stable (at 20%), similar to the recent 5-year average.
The United States remains the world’s leading cotton exporter, increasing exports (2% annually) to 19.3 million bales (upland and ELS cotton) by 2029/30. However, the US share of world cotton trade falls to 33% by 2029/30, compared with 39.4% in 2016/17.
Area planted to cotton in Brazil is projected to expand in the Mato Grosso region, with continuing yield growth as well. Brazil’s cotton exports are projected to increase by 4.9 million bales by 2029/30, corresponding to a 5.2% annual growth rate, the largest projected export increase among the world’s major exporters. Brazil became the world’s second-ranking cotton exporter in 2018/19, surpassing India, and remains second through the projection period.
India’s cotton exports increase by 0.6% annually, reaching 7.4 million bales in 2029/30. Improved yields in India raised production and exports earlier in the decade, but bollworm resistance and weather issues have hampered yields in recent years. India was the second-largest exporter for a decade until Brazil and Australia surpassed India in 2018/19. For the projection period, however, India is expected to be the world’s third-largest cotton exporter behind the United States and Brazil.
Exports from the 15 countries of the Economic Community of West African States are projected to experience sustained 2.4% annual growth in the next decade. Improvements in technical and financial infrastructure will help boost production and exports. Cotton exports from the other countries in Sub-Saharan Africa are projected to increase 1% annually. Sub-Saharan Africa is expected to add 1.36 million bales to trade and account for 11% of world trade over the projection period.
Government policies in the major cotton-producing countries in Central Asia are promoting investment in textile industries and contributing to exports of textile products rather than exports of raw cotton. Exports of raw cotton decline throughout the projection period. FSU exports (entirely from Central Asia) decrease 1.9% annually, with only 1.2 million bales exported by 2029/30, far below the peak exports of 7.3 million bales in 2005/06.