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CAC Raises Outlook for Global Cotton Inventories

CAC again raises outlook for record global cotton inventories.

NEW YORK, July 1 (Reuters) — The International Cotton Advisory Committee (ICAC) on Tuesday raised its outlook for record world inventories by the end of the 2014/15 crop year for a second straight month, hiking it above 21 million tonnes because of higher production and lower demand expectations.

A 6-percent rise in inventories by the end of the 2014/15 crop year will mark a fifth straight season of rising world stocks and leave them large enough to meet global demand for 11 months, ICAC said in its monthly forecast.

Total 2014/15 world output is expected to be down year-over-year at 25.3 million tonnes due to reduced acreage in China, though that was slightly above ICAC’s June forecast.

U.S. output in 2014/15 is expected to jump to 3.2 million tonnes because of much-needed rains in the Southwest region, according to the ICAC’s statement. India’s production in 2014/15 will remain close to 2013/14’s record level of 6.5 million tonnes, depending on timing of key monsoon rains.

Fiber prices are already falling due to a shift in Beijing’s cotton program set to begin in the new season, as the Chinese government moves to reduce its ballooning inventories. A stockpiling program Beijing launched in 2011 has driven voracious demand for foreign fiber and kept a floor under prices.