For the news of world cotton market spoke in an exclusive interview at Agrotypos, Jose Sette, Executive Director of International Cotton Advisory Committee (ICAC). Referring to our country, he believes that Greece should strengthen even further the commercial links with Turkey and Egypt, while also improving relations with new suppliers, such as Bangladesh and Vietnam. He also mentions that although yield in Greek cotton cultivation is approximately 20% higher than the world average yield, steps should be taken to raise yields even higher, in order to promote the long-term profitability and competitiveness.
Concerning the international situation in cotton market, he said that “in the case of cotton consumption, the Chinese textile industry reached its peak in the period from 2007 to 2010, when China represented roughly 40% of world consumption” and cotton consumption is migrating to other countries in Asia and he adds that “the large inventories built up in preceding years are now starting to be absorbed, but stock levels are still high in relation to consumption”. Regarding the future of the cotton prices he said “The prospects for substantial price increases are low as long as these stocks are not absorbed”.
How has the cotton market been developed during the last years? Which are the main statistics of the cotton sector (production, imports, exports etc)?
In 2015/16, production is estimated at 22 million tons and consumption at 23.7 million tons. Exports are expected to reach 7.4 million tons. The most important development in the world cotton market in recent years has been the impact of the Chinese official reserve policy. This policy led China to accumulate substantial reserves and kept cotton prices above their long-term average. As a result, world production surged from 2010/11 to 2014/15 and exceeded consumption by 13.4 million tons. After the announcement of changes in Chinese cotton policy last year, production fell below consumption in 2015/16. The large inventories built up in preceding years are now starting to be absorbed, but stock levels are still high in relation to consumption. Stocks are expected to reach 20.4 million tons at the end of the 2015/16 season, a drop of about 1.7 million tons from the previous marketing year.
Cotton production in China has declined during the last years and the Chinese government is selling cotton from its reserve. Do you believe that cotton production and consumption (textiles industries) is moving gradually to countries like Vietnam and Bangladesh?
Both cotton production and consumption are falling in China. With regard to production, government support is now focused on the province of Xinjiang and production is falling in other traditional cotton-growing areas. In the case of cotton consumption, the Chinese textile industry reached its peak in the period from 2007 to 2010, when China represented roughly 40% of world consumption. As a result mainly of rising labor costs, textile production is migrating to other countries in Asia, such as Bangladesh and Vietnam. China’s share of world cotton consumption has dropped to about 30%. These new consuming countries are not major cultivators of cotton, so they are a potential export market for cotton-producing countries such as Greece.
Low cotton prices in 2014/15 discouraged farmers from planting. What do you expect regarding prices mid-term?
The world cotton market continues to face an oversupply of product. In 2014/15, the world stock-to-use ratio reached its highest level in the last seventy years, mainly as a result of the accumulation of high governmental stocks in China. Since then, production has dropped and the excess stocks have started to be consumed. Even so, stocks are still at high levels. The prospects for substantial price increases are low as long as these stocks are not absorbed.
What percentage of world cotton production consists the organic cotton production? Is the cloth industry willing to increase the consumption of organic cotton?
According to the latest figures published by the organic movement, in 2013/14 (the latest year for which figures are available), production of organic cotton was 117,034 tons, representing less than 0.5% of the world total. Any increase in the use of organic cotton by the textile industry will depend heavily on changes in consumer demand.
Are there any innovative techniques that are used in cotton cultivation?
The last major technological advance in cotton cultivation was the introduction of biotech cotton, which has helped yields to rise by roughly 33% in the last twenty years. However, in recent years the growth in yields has slowed. More research into new techniques and more efficient use of existing techniques is required.
How important is Greece for the global cotton production and what do you suggest the Greek cotton growers to do?
In 2015/16, Greece produced 218,000 tons, which represents only 1% of world production. However, Greece is an important supplier to the textile industry in the region, such as Turkey and Egypt. Steps should be taken to strengthen even further the commercial links with these countries, while also improving relations with new suppliers, such as Bangladesh and Vietnam. In addition, yields in Greece are about 840 kg/hectare. Although this is approximately 20% higher than the world average yield, steps should be taken to raise yields even higher, in order to promote the long-term profitability and competitiveness of Greek cotton.