The global cotton market has witnessed notable shifts over the past few years, influenced by various economic, environmental, and geopolitical factors.
The ‘24 season was marked by modest declines in production, with a 1.5% drop, largely attributed to reduced acreage in major cotton-growing countries. Despite these production challenges, cotton mill use has experienced a slight recovery, growing by 1.
2%, though still far below the levels seen in 2006/07. Additionally, global cotton trade rebounded, driven by a substantial increase in China’s cotton imports, which doubled compared to previous years.
Production Decline and Recovery Outlook
The 2023/24 global cotton production was lower, with a 1.5% decrease primarily due to decreased planted areas in major cotton-producing countries such as the U.S., India, and China. However, the outlook for 2024/25 indicates a recovery in global cotton production, projected to increase by 3.3%, driven in large part by favorable conditions in the U.S., which is expected to boost its output significantly. The U.S. cotton crop, following a period of significant production declines, is poised to help stabilize the global supply of cotton. Additionally, moderate weather conditions are expected to benefit other regions like Turkey and Greece, further supporting the global production rebound.
Price Trends and Market Outlook
Cotton prices have followed a downward trajectory since the peak of 2021/22, with the A Index continuing to weaken but remaining above 90 cents per pound in 2023/24. The projected rise in production, particularly from the U.S., is expected to stabilize global prices, with the A Index forecast to average closer to $1.00 per pound in 2024/25. This increase reflects the recovery in demand, particularly in the textile sector, and the tighter cotton supply in key regions.
However, the cotton price will continue to be influenced by various factors, including the price ratio between cotton and polyester.
Polyester, being a more cost-effective and versatile alternative to cotton, remains a significant competitor in the global textile industry. The global cotton market is poised for moderate recovery in the coming seasons. While 2023/24 has been a challenging year with reduced production and slow growth in mill use, the outlook for 2024/25 is more optimistic. U.S. production is expected to rebound, global mill use is projected to grow at a faster pace, and prices are set to rise closer to $1.00 per pound. However, challenges such as competition from synthetic fibers, economic uncertainties, and trade tensions will continue to shape the cotton landscape, requiring stakeholders to remain adaptable in their strategies. The recovery of global cotton stocks, alongside the growth in key consumption markets, suggests a positive yet cautious outlook for the cotton industry in the near future.
