Over the next 10 years, China will continue to exert considerable influence on world cotton textile production, cotton production and trade, with the United States losing on the latter and Brazil gaining, according to a forecast by the Cotton Economics Research Institute (CERI) at Texas Tech University.
The outlook, a 10-year projection of cotton and textile production, mill use and trade for 24 countries, was presented by TTU professor and CERI director, Don Ethridge, during the 2006 Beltwide Cotton Conferences in San Antonio.
The outlook assumes normal weather patterns during the projection period, and is based on commitments by the United States to eliminate Step 2. The outlook also assumes no changes in current U.S. domestic farm programs.
World cotton mill use and world man-made fiber use is projected to grow by 17 percent and 16 percent, respectively by 2015-16. Cotton prices are expected to increase in 2006-07, equaling man-made fiber prices in that year and remaining so over the course of the forecast.
World cotton production is estimated to parallel mill use in 2005-06, but mill use is expected to exceed production by 2 million bales in 2006-07 before equaling it again in 2007-08.
Over the long run, increases in cotton production to meet rising mill use are expected to come primarily from increased yields rather than increased acreage. Worldwide yields are projected to increase by 10.6 percent by 2015, or by about 50 pounds of lint per acre. Harvested area is projected to increase by 3 million acres, or 3.8 percent.
In the coming year, world trade is projected to decline as production and use forecasts converge. But world cotton trade is expected to increase by about 9 million bales by 2015.
The world stocks-to-use ratio is projected to decline gradually over the next 10 years and remain in the low 40 percent range. Cotton prices will rebound from 51.87 cents per pound in 2004-05 to an estimated 71 cents per pound in 2015-16. This represents an increase of 21 percent over the current marketing year’s 58.60 cent price.
Cotton mill use in China is expected to grow by about 13 million bales over the next 10 years, with the help of expiring tariff impositions in the United States and the European Union. China’s cotton production is not expected to keep pace with mill use, resulting in further import growth
Harvested area in China is expected to increase in response to higher cotton prices and increased domestic usage, according to the forecast. Harvested acres should reach 14.8 million acres in 2015-16 compared to a recent high of 14 million acres in 2004-05. Cotton yield improvement in China is expected to be around 11 percent over the period, increasing from 1.94 bales per acre to 2.15 bales per acre.
India is expected to continue growth in cotton mill use, using an additional 3 million bales by 2015-16, a 19 percent increase. India is projected to continue to import primarily longer staple varieties from Egypt and the United States. Exports from India are expected to more than double from 2005-06 to 2015-16.
Harvested cotton area in India is projected to remain stable at around 23 million acres. Significant production increases are projected with the widespread adoption of Bt cotton varieties.
Mill use in Pakistan is projected to continue its steady growth over the next 10 years with mills requiring an additional 3 million bales by 2015-16. Production over this period is projected to increase, but by less than 2 million bales. This will result in a doubling of Pakistani cotton imports, from 1.6 million bales to 3.2 million bales. Harvested area in Pakistan is projected to remain flat at just under 8 million acres.
Cotton use in Turkey is projected to increase from 7 million bales today to 8 million bales in 2015-16, with increased imports filling the need rather than domestic production. While harvested area is projected to increase in Turkey, it is not expected to achieve levels seen in 2004-05. Average yields are forecast to increase from 2.38 bales per acre to over 2.5 bales.
By 2015, China’s share of world cotton mill use is expected to increase from 37 percent to 42 percent. Marketshare for India, Pakistan, and Turkey is projected at 15 percent, 11 percent, and 6 percent, respectively. U.S. share of the world market is expected to drop from 5 percent to 4 percent.
Returns from cotton production in the United States are not expected to attract a significant amount of new acreage over the next 10 years, according to the outlook. Production increases will be a result of increased yields, although a return to record yields seen in 2004-05 is not anticipated.
Projections are for slight declines in cotton acreage in the Delta, Southeast and West, accompanied by increases in production in all areas except the West, where projected yield increases are not sufficient to offset the decline in acres.
Australia is projected to continue as a major world exporter of cotton. With a very small domestic textile industry, virtually all of Australia’s cotton enters the world market. Production is expected to increase by 1 million bales by 2015-16.
By 2015-16, Uzbekistan is projected to lose its long-standing position as the world’s second leading cotton exporter, falling to third behind emerging cotton exporter Brazil. Static mill use combined with a sharp increase in production would place Brazil only behind the United States in cotton exports by 2015-16. Exports are projected to reach almost 5 million bales by the end of the baseline period.
Thanks to new agricultural production in the frontier regions of Brazil, the country is expected to increase harvested acres from 2.5 million acres to 4 million acres by 2015-16, a 60 percent increase. By the end of the baseline period, Brazil is expected to become the world’s No. 2 exporter of raw cotton.
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