Report | Global Cotton Market & Trade 2024

The United States Department of Agriculture (USDA) recently released "Cotton: World Markets and Trade", which provides a detailed analysis of the global cotton market dynamics and future development trends, focusing on the market dynamics of major producing and importing countries. Details are as follows:

Brazil became the world's largest cotton exporter

Production & Exports

Brazil is expected to export 12.3 million bales of cotton in 2023/24, becoming the world's largest cotton exporter for the first time. Brazil's cotton production has doubled in the last seven years, reaching a record 14.6 million bales in 2023/24. The increase in production is mainly due to technological advances, including the application of genetically modified seeds, and a significant expansion of the harvested area. Favourable weather conditions and stable input prices also contributed to record yields this season.

Domestic consumption and exports grow

Despite the increase in supply, domestic consumption has not expanded with it, leading to a surge in Brazil's cotton exports. Over the past seven years, Brazil's exports have jumped from fourth to first place in the world, surpassing Australia, India and United States. With only 20 percent of global cotton production in the southern hemisphere, most concentrated in Brazil, Brazil is able to provide counter-seasonal supplies on the global market. In addition, Brazil benefits from a weak currency, making its exports more price-competitive in the global market relative to other countries.

Changes in United States cotton exports

Historical status and current situation

United States has been the largest exporter of cotton since 1993/94 but was overtaken by Brazil in 2023/24. During this period, cotton consumption in United States fell from 10.3 million bales to 1.9 million bales in 2023/24, and the share of exports increased from 30% to 80%. Despite ranking second or third in production, United States maintained the largest export volume.

The impact of the decline in production

United States cotton production fell to a 40-year low in 20 years in 2023/24 due to drought in Texas. This has led to a significant drop in United States's cotton exports. Forecasts for 2024/25 assume that United States cotton production is expected to rebound under normal weather conditions, with United States likely to regain its position as the largest exporter. However, uncertainty over weather conditions in Texas could keep Brazil in the lead.

China's role in the global cotton market

Production vs. consumption

China's cotton production in 2024/25 is expected to increase by 500,000 bales to 27.5 million bales. This is mainly due to good weather conditions and advances in agricultural technology. China is the world's largest consumer of cotton, with an estimated consumption of 39 million bales in 2024/25, up 500,000 bales from the previous season.

Imports & Inventories

Although China is a major producer, it is still dependent on imports for its needs. China's cotton imports in 2024/25 are forecast at 11.5 million bales, down 5 million bales from the previous season, mainly due to higher domestic production. China's ending stocks are expected at 40.93 million bales, slightly lower than the previous year's 41.05 million bales.

Global outlook for 2024/25

Production vs. consumption

Global cotton production is expected to increase by more than 1 million bales to 120.2 million bales in 2024/25, mainly due to an increase in harvested area in the United States, where production is expected to increase by 1.2 million bales. China's production increased by 500,000 bales, but Pakistan's production decreased by the same amount. Global consumption is expected to increase by 250,000 bales to 117.2 million bales, with domestic consumption increasing in India and Malaysia but decreasing in Pakistan.

Trade & Inventory

Global trade is expected to decline by nearly 400,000 bales to 44.6 million bales, mainly due to lower imports from China. India's exports are expected to decrease by 400,000 bales. Global ending stocks are expected to fall by nearly 900,000 bales to 82.6 million bales.

Cotton prices and market dynamics

Price Changes

The December 2024 cotton futures contract price came under pressure to 71 cents per pound, hitting a four-year low, as United States acreage exceeded expectations, United States shipments slower than expected, and lower commodity prices. Cotton prices in China also fell 4 cents to 98 cents a pound. Cotton prices in India and Brazil increased, by 3 cents and 2 cents, respectively, to 88 cents and 76 cents per pound. Prices in Pakistan fell 6 cents to 79.9 cents a pound.

Futures vs. spot prices

Since the last WASDE report, cotton futures prices on the Intercontinental Exchange (ICE) have fallen slightly, hitting a new four-year low before finally stabilizing at around 71 cents per pound. Data from the United States Department of Agriculture showed that actual United States shipments were lower than expected, which also put pressure on futures prices. In addition, the latest data from the Commodity Futures Trading Commission showed that the net long position of non-commercial and index participants remained largely unchanged at about 35,000 contracts.

Future outlook and conclusions

Production & Market Impact

Brazil became the world's largest cotton exporter for the first time in 2023/24, reflecting significant advances in technology and production in recent years. In the coming years, United States may regain its lead, but weather conditions in Texas will be a key factor. The global cotton market is expected to continue to face production and consumption volatility in 2024/25, and prices will also be affected by a number of factors.

Data summarization and analysis

Overall, the position and dynamics of Brazil, United States and China in the global cotton market deserve great attention. In 2023/24, Brazil became the world's largest cotton exporter with 12.3 million bales, while United States saw a decline in exports due to lower production. China's production and consumption have increased, and inventories have remained stable despite lower imports. Global cotton production is expected to increase in 2024/25, mainly due to higher production in the United States and China. At the same time, global trade volumes are expected to decline slightly and ending stocks will also decline.

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