In 2009/10, world cotton acreage shrank for a second straight year, to 30.4 mha, under continued competition from grains and oilseeds, which have seen continued strong prices. Production shrank to 22.3 mmt on yields of 733 kg/ha. Mill use is expected to decline to 24.9 mmt under a modest rebound as world economies emerge from the recent economic crisis. The growth in mill use and the modest contraction in production pull stocks to the lowest level in several years. The Cotlook A-index Far East (FE) price for cotton strengthens to $1,633 per mt as supplies tighten. Price reporting has made a transition to the FE price, and the previous Northern Europe (NE) price is no longer being reported. Historically, the FE price has trended lower than the NE price. World cotton demand strengthens in 2009/10 and in the next few years but will be dependent upon the resolution of the current economic crisis. World cotton area returns to very modest growth as world GDP recovers, but it remains well below the area seen in 2005/06 and 2006/07.
Chinese cotton production fell signifi cantly, to 6.9 mmt, in 2009/10 on a proportional decline in acreage. Acreage is expected to increase in 2010/11 but to remain below 6 mha during the next decade. Chinese mill use grew to 10.1 mmt in 2009/10, after stumbling the previous year as world demand dried up. In 2009/10 Chinese consumption will represent 41% of total world consumption. Chinese demand in 2009/10 and beyond is expected to grow at a more tepid pace as the global economy recovers. As this recovery occurs, and with acreage relatively stable, Chinese cotton imports are expected to rise, reaching 29% of use by 2019/20 and over 40% of world trade fl ows, making China the dominant destination for cotton trade.
China’s increase in demand is met in part by increased area and improving yields in India, which has the most area under cotton cultivation in the world, estimated at just over 10.2 mha in 2009/10, a signifi cant jump from the previous year. India is projected to increase its area modestly, to 10.4 mha in 2010/11, and area grows only marginally from that point. Yields in India have been below the world average and stumbled in 2009/10, falling to 497 kg per ha, but they have grown rapidly with the adoption of Bt cotton and are expected to expand to 674 kg per ha by 2019/20, still below the world average but closing the gap. While grain and oilseed prices are providing competition for area, growing yields mean cotton acreage should hold its own under stable prices. The additional area, coupled with yield growth, results in production of 7.1 mmt and net exports of 1.9 mmt by the end of the projection period.
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