By Clint Thompson
Demand for cotton has plummeted across the world. It’s reflected in the latest cotton prices update. They show cotton futures prices set at 56 cents per pound.
In the latest UGA Cotton Team Newsletter, the supply chain is severely impacted globally by COVID-19, according to Yangxuan Liu, University of Georgia Cooperative Extension economist. She said, “an unexpected reduction in cotton mill use data is observed across all the major cotton spinning countries, including China, India, Pakistan, Bangladesh, Turkey and Vietnam.”
During the peak of the coronavirus pandemic in early March, cotton spinning in China fell by 90%.
Unemployment Leads to Less Income for Apparel
Retail sales of clothing and textiles around the world have plummeted. Many apparel stores are closed due to the virus. In addition, the unemployment rate has skyrocketed to 14.7%. Income that consumers might be able to spend on apparel in previous years is limited this year.
The forecast for the current year’s world cotton consumption dropped 6.4% in April compared to March.
“The current forecast of world cotton demand is at 111 million bales, while the world cotton supply is at a relatively high level of 122 million bales. The world ending stocks are also projected to increase at the third-highest level for the past decade at 91 million bales,” Liu said in the UGA Cotton Team Newsletter. “With supply outpacing demand and rising global ending stocks, we have seen downward pressure on global cotton prices.”
U.S. cotton acreage is projected at approximately 13.7 million acres in 2020 after a decline in 2019. This is according to the USDA Prospective Plantings Report. Liu cautions that the survey was conducted in early March. It may not have captured effect of the full decline in cotton prices since then.
U.S. exports forecasts for cotton are currently at 15 million bales. This is a decrease in 1.5 million bales from last month’s forecast.