Top commodities - cotton prices projected 2015 - 2016 : U.S. cotton production will fall to 2.8 million tonnes in the 2015/16 crop year, industry analysts at Cotton Outlook (Cotlook) said in a report on Thursday, just one week after a bullish U.S. government crop forecast sent prices soaring.
The forecast production decline, however, was outweighed by a cut in Cotlook's projection for world consumption, to 23.9 million tonnes, down 305,000 tonnes from its July estimate, due to a downward revision in its forecast for the Indian subcontinent's consumption by 200,000 tonnes to 9 million tonnes.
The end result will be a reduction in global inventories of 584,000 tonnes by the end of the year, smaller than the 597,000 tonne reduction it anticipated last month, Cotlook said.
The cotton market is suffering from massive global inventories, primarily a result of years of stockpiling in top-consumer China.
Cotlook's 335,000-tonne reduction in U.S. output was partly outweighed by an increase in India's output, resulting in a net decrease in its forecast for world production by 292,000 tonnes to 23.4 million tonnes.
The slash in U.S. output comes on the heels of a monthly U.S. Department of Agriculture report that reduced forecasts for U.S. production and inventories by the end of the 2015/16 crop year, which began this month, by more than market expectations, contributing to a sharp increase in prices.
For 2015/16, world stocks are expected to decrease for the first time in five years to 23 million tonnes (mt) due to growing consumption outside of China, a reduction in China’s stock and lower global production. World consumption is forecast to increase by 3.5 percent, based on world GDP growth and the lagged effect of falling cotton prices.
World production is forecast to fall nearly 6 percent to 24.2 mt due to prevailing lower prices. Imports in China are expected to fall to the lowest level in 13 years due to continuing import restrictions accompanying efforts to reduce government-held stocks. Chinese cotton imports dropped nearly 26 percent in June compared to last year. It imported 161,800 tonnes in June and 933,900 tonnes in first six months of the year, which is 33 percent less from the same period in 2014.
China’s plantings are forecast to decline 27.4 percent from last year according to the China Cotton Association. Meanwhile, China is going to sell 1 million tonnes of cotton from reserves in July-Aug. Outlook We expect Cotton prices to trade sideways to negative on reports on good rains in the cotton tracks of Gujarat coupled with higher cotton reserves and expectation of good production estimates for the new season.
The poor economic data for China also negative for Cotton prices as it is the top exporter. However, good steady demand from the mills, expectation of good exports in international market and low response to China stockpile auction may be positive sign for cotton prices.
The forecast production decline, however, was outweighed by a cut in Cotlook's projection for world consumption, to 23.9 million tonnes, down 305,000 tonnes from its July estimate, due to a downward revision in its forecast for the Indian subcontinent's consumption by 200,000 tonnes to 9 million tonnes.
The end result will be a reduction in global inventories of 584,000 tonnes by the end of the year, smaller than the 597,000 tonne reduction it anticipated last month, Cotlook said.
The cotton market is suffering from massive global inventories, primarily a result of years of stockpiling in top-consumer China.
Cotlook's 335,000-tonne reduction in U.S. output was partly outweighed by an increase in India's output, resulting in a net decrease in its forecast for world production by 292,000 tonnes to 23.4 million tonnes.
The slash in U.S. output comes on the heels of a monthly U.S. Department of Agriculture report that reduced forecasts for U.S. production and inventories by the end of the 2015/16 crop year, which began this month, by more than market expectations, contributing to a sharp increase in prices.
For 2015/16, world stocks are expected to decrease for the first time in five years to 23 million tonnes (mt) due to growing consumption outside of China, a reduction in China’s stock and lower global production. World consumption is forecast to increase by 3.5 percent, based on world GDP growth and the lagged effect of falling cotton prices.
World production is forecast to fall nearly 6 percent to 24.2 mt due to prevailing lower prices. Imports in China are expected to fall to the lowest level in 13 years due to continuing import restrictions accompanying efforts to reduce government-held stocks. Chinese cotton imports dropped nearly 26 percent in June compared to last year. It imported 161,800 tonnes in June and 933,900 tonnes in first six months of the year, which is 33 percent less from the same period in 2014.
China’s plantings are forecast to decline 27.4 percent from last year according to the China Cotton Association. Meanwhile, China is going to sell 1 million tonnes of cotton from reserves in July-Aug. Outlook We expect Cotton prices to trade sideways to negative on reports on good rains in the cotton tracks of Gujarat coupled with higher cotton reserves and expectation of good production estimates for the new season.
The poor economic data for China also negative for Cotton prices as it is the top exporter. However, good steady demand from the mills, expectation of good exports in international market and low response to China stockpile auction may be positive sign for cotton prices.
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