The International Cotton Advisory Committee expects lower cotton production next year owing to low values. It anticipates China's output to hit a 12-year low.

The group has warned that "low prices are expected to persist" for the rest of the 2014-15 – as it cut its forecast for the season-average value, as measured by the Cotlook A index, by 4 cents to 68 cents a pound. The low prices – the weakest in six years – will, in making cotton less appealing to growers, cut world plantings for 2015-16 by 6 per cent to 31.6 million hectares.

"Cotton is likely to be much less attractive to plant due to falling prices while prices for competing crops such as corn and soybeans have recovered from price downturns last September and October," the committee said. Chinese output will slump by some 700,000 tonnes to 5.7 million tonnes (26.2m bales), the lowest since 2003-04. While the committee did not detail the reasoning behind this estimate, it follows subsidy reforms which have prompted a particularly steep slide in China's cotton price - which plunged by nearly 60 per cent to 13,605 yuan a tonne in the last nine months of 2014, according to the China Cotton Association's price index.

The drop in China's production will, for a second successive season, keep at second place in the world cotton production table behind India, whose own output will fall by some 300,000 tonnes to 6.5m tonnes. Cotton area in the US, meanwhile, the top cotton exporting country, will drop by 10 per cent to 3.6m hectares. US production will fall by 7 per cent to 3.3 million tonnes (15.2m bales). Nonetheless, production will in 2015-16 fall only narrowly behind consumption, whose growth will be constrained to 2 per cent.

www.icac.org