Daily Times

Pakistan’s cotton production is expected to reach 5.3 million bales during the upcoming fiscal year 2021-22 from 4.5 million bales in the current financial year despite balanced risks to the textile crop, according to Fitch Solutions.

However, Pakistan’s official estimates show that cotton production in the current financial year reached 5.645 million bales. Sharing the global cotton statistics, Fitch Solutions said that “bad weather in the US and low prices at the time of plantings will lead to a 4.9 percent decline in global cotton production in 2020-21.”

While sharing the future outlook, the research arm of the New-York based rating agency said that “we made significant downward revisions to our country production forecasts for 2020/21 last November 2020 and March 2021, and are maintaining our outlook in this quarterly update. However, the outlook for the 2021/22 season has somewhat deteriorated in several markets recently, and we now expect global production to grow by 4.7 percent (5.3 percent previously). We revised down slightly our production forecasts for China and India.”

On the other hand, Fitch pointed out that cotton consumption declined by a sharp 13.4% in 2020 due to the Covid-led economic recession and lockdowns, which greatly disrupted retail activities. However, it expects consumption to rebound in 2021, by 12.7 percent on a year-on-year basis while absolute consumption to fully recover by 2022.

“The strong ongoing economic recovery in 2021 means that the textile industry will replenish their stocks this year, boding well for cotton demand. The pick-up in consumption will carry on but slow down into 2022 (+5.0 percent), when we see it reaching pre-pandemic levels in absolute terms,” it said.

Commenting on prices, the report said, “We expect prices to average at an elevated USc87.0/lb in 2021, compared with the year-to-date average of USc85.2/lb. This forecast suggests that prices would average at their highest level since 2011. We see prices remaining elevated in the coming quarters as supply is tight amid the robust Covid-19 economic recovery and a strong pick-up in demand in 2021. We see prices trading in the USc80-100/lb range in the coming months. We see strong resistance at the USc100/lb level, last reached in February 2021.”