Global cotton prices to rise to USD 1.72 per kg in 2021

Although cotton production is projected to increase by 5 percent in 2021, it is unlikely to return to 2019—level. Demand on the other hand, is expected to outpace supply leading to a rise in global cotton prices. As per a World Bank report, the global average price of raw cotton will rise to USD 1.72 per kg in 2021.

Favorable weather, increase in area to boost cultivation

The main factors driving up prices rise is increasing demand from global markets, says Indexbox’s new report ‘World Cotton Lint—Market Analysis Forecast, Size, Trends and Insights’. It states, favorable weather conditions and increase in area under cotton cultivation will boost yields in the U.S. by 523 tons, in Brazil by 436 tons, Australia 239 tons and Pakistan 174 tons during the year.

On the other hand, production in China will decline giving way to India to increase its share of cotton production to 24 percent. Pakistan, India,Bangladesh, Vietnam, Turkey and China will be the major demand drivers of cotton lint in 2021. China in particular, will step up imports as local produc—tion will not be able to meet domestic demand.

Recycling technologies to curb water consumption

In 2021, growth in cotton market will be challenged by strong compe—tition from other natural and functionally similar materials such as hemp or flax as well as synthetic textile materials. Farmers will prefer growing hemp for its convenience and lower water consumption. In order to make cot—ton production more sustainable, industry leaders need to introduce a new cost—effective recycling method that also reduces water consumption.

India’s cotton exports decline in 2020

In 2020, India’s cotton lint exports decreased for first time since 2016 by 9.2 percent. India exported 965,000 tons of cotton lint during the year followed by Brazil which exported 865,000 tons. Together, the two countries made up 23 percent of global cotton lint exports. They were fol—lowed by other exporters including Benin, Greece, Cote d’Ivoire, Burkina Faso, Nigeria, Australia and Uzbekistan which together made up 19 percent of total exports.

The U.S. was the largest exporter of cotton lint during the year in value terms. It exported 46 percent of global cotton lint followed by India and Brazil. The average price of cotton lint exports declined 6.9 percent in 2020 to USD 1,616 per tons. Nigeria commanded the highest price for cotton lint exports at USD 2,222 per tons followed by Uzbekistan whose exports were priced at USD 1,823 per ton and India whose cotton lint exports fetched USD 1,501 per ton.

China, the largest cotton lint importer

After growing for nearly three years, cotton lint im—ports declined by 16.8 percent to 7.1 million tons in 2020.Value also declined to USD 12.2 billion during the year. With 1.9 million tons, China was the largest importer of cotton lint during the year followed by Vietnam with 945 tons and Pakistan 819 tons.

Together the three countries along with Turkey and In—donesia imported 79 percent of world’s cotton lint. In value terms, China imported 29 percent of global cotton lint. Im—ports amounted to USD 3.6 billion, second largest importer Vietnam imported USD 1.4 billion. Pakistan was the third largest importer of cotton lint with a 12 percent share.

The average price of cotton lint imports declined 5.3 percent in 2020 to USD 1,706 per tons. India’s imports were priced highest at USD 1,979 per ton followed by China at USD 1,929 per ton, Vietnam at USD 1,486 per ton and Turkey at USD 1,519 per ton were amongst the lowest.