International cotton prices have continued falling in the first two months of the new season. Given the predicted 1.8 million tons of surplus cotton production and changes in China’s cotton policy, prices are unlikely to rise to the levels seen in the last two seasons.

With the fall in prices, world cotton consumption is forecast to rise nearly four per cent, with more of the consumption occurring in the latter half of the season.While cotton’s absolute volume of consumption is likely to grow, it will probably not gain back much of its market share as it takes time for the market to adjust.

World cotton production is forecast up one per cent. China’s overall production is projected at 6.4 million tons in 2014-2015. India expanded cotton area by five per cent as the delayed monsoon encouraged farmers to switch to cotton, and with yield closer to the three-year average, production is likely to reach 6.6 million tons, making India the world’s largest cotton producer by 2014-2015.

Harvested cotton area in the United States could reach 3.9 million hectares as plentiful rainfall reduces the abandonment rate this season.

Though some mills still hold additional quota for 2014, China’s imports are forecast to fall 36 per cent and world imports would decline 11 percent. Imports by the rest of the world, notably southeast Asia, are projected to increase two per cent.