Higher Stock Over the past few years and mainly from the Chinese cotton industry with its domestic purchasing policy, cotton left some big question marks still to be answered, while cotton stocks soared to sky high numbers. Last week the ICAC reported in a press release: “In 2014-15, world-ending stocks are estimated to have risen by 9 percent to 22 million tons, reflecting a stock-to-use ratio of 90 percent. From 2010-11 through the end of 2014-15, the world has accumulated 13.4 million tons of stock due to production exceeding consumption.”” “Just as the Rupp Report has mentioned many times before, ICAC reported that “Much of the world’s excess stock is held by the Chinese government from purchases made by the China National Cotton Reserve Corporation under its stockpiling policy from 2011-2014. The Reserve made its final purchases of the 2013/14 crop in March 2014 with sales continuing through August 2014, ending with an accumulated volume of around 11.3 million tons.””&nbsp Followed By Lower Stocks However, according to the latest news, the Chinese government (finally) started now to sell its stockpiles at prices close to the current domestic market price in the hopes of maintaining market stability. According to the ICAC: “The cumulative volume of cotton sold through the end of July is around 40,000 tons. India’s ending stocks are estimated at 2.2 million tons in 2014/15, which is the second largest volume of stocks. Part of the increased volume is held by the Indian government, which procured stocks under its minimum price support program. Government purchases in 2014-15 are estimated at around 1.5 million tons, and sales through the end of July at around 650,000 tons. However, exports from India have fallen by 51 percent to 980,000 tons, also contributing to the buildup of stocks.”” “ITMF recently reported that compared to the previous quarter, global yarn production dropped in Q1 2015. “… yarn output in Asia and in Europe fell, while it increased in North America. On an annual basis, the global yarn production decreased the second quarter in a row. Declines were strongest in Asia and Europe, while North America saw a modest increase. Worldwide yarn stocks rose in Q1/2015 in comparison to Q4/2014. Thereby, yarn stocks in Asia were increased, while European stocks were reduced. Year-on-year, global yarn stocks increased. Yarn orders in Europe decreased in Q1/2015 compared to the previous quarter and also on a year-on-year basis” ““Global fabric production fell in Q1/2015 compared to the previous quarter. Thereby, fabric output fell strongest in Asia and in Europe. It has to be pointed out that Asia’s production is usually significantly lower in the first quarter compared to the fourth quarter of the previous year. The reason for that is that due to Chinese New Year holidays, which traditionally are around the end of January, China has fewer working days in the first quarter than during the rest of the year. Compared to Q1/2014 the global fabric production remained unchanged. While Asia’s fabric output climbed, European output fell. World fabric stocks were increased quarter-on-quarter in Q1/2015 due to a strong rise of European stocks. Stocks in Asia and North America were increased moderately. Year-on-year, the picture was mixed with increases in Asia and North America and decreases in Europe. Overall, global fabric inventories rose annually. Fabric orders in Q1/2015 showed a strong increase in Europe.”” “Back to the ICAC press release from August 3, which reported: “Cotton stocks in 2015-16 are projected to decrease as consumption overtakes production for the first time in five seasons. World production in 2015-16 is forecast down 9 percent to 23.8 million tons. Output is expected to fall from 2 percent to 16 percent in the five largest producing countries. Rising costs of production and a decreased subsidy in China are likely to lead to a 16 percent drop in production to 5.4 million tons” ““India’s production is forecast down just 2 percent to 6.4 million tons due to improved yields from better monsoon weather this season and low prices for competing crops reducing the loss of cotton area. World consumption is projected to rise by 2 percent to 24.9 million tons in 2015-16. China’s consumption is forecast to remain stable at around 7.7 million tons” ““World cotton trade is expected to remain stable at 7.7 million tons in 2015-16. In 2015, the Chinese government limited import quota to the volume required under WTO rules of 894,000 tons, in part to spur demand for domestic cotton and Reserve sales. Given the large volume of stocks within China, it will likely maintain the restricted import volumes through 2016, and China’s imports could fall 10 percent to 1.6 million tons in 2015-16. Imports outside of China are forecast to increase by 4 percent to 6.1 million tons,” concluded the ICAC”  Regarding yarn and fabric production the ITMF stated:  “In Q1/2015, global yarn production fell by 15 percent quarter-on-quarter after a decline of 29 percent in Q4/2014. The reason for the strong decline were exceptionally weak figures from Asia. Asian yarn production fell by 16 percent quarter-on-quarter. The output in Europe declined by nearly 10 percent, while in North America it rose by 4.4 percent. In comparison to Q1/2014 worldwide yarn production fell by nearly 31 percent. Thereby, in Asia output fell by 33 percent. In Europe, yarn output decreased by 13 percent, while it climbed moderately by 1 percent in North America.”” ““Global fabric production decreased by 11 percent in Q1/2015 compared to the previous quarter. Strong declines of 12 percent and 5 percent were recorded in Asia and Europe respectively. Year-on-year, global fabric output remained unchanged. Thereby, Asian production climbed by 1.5 percent, while European output fell by 7.8 percent,” reported the ITMF”  Yarn Inventories, Fabric Stocks “Global yarn inventories were increased by nearly 4 percent in Q1/2015 quarter-on-quarter,” according to the ITMF. “Thereby, European inventories fell by 3.6 percent. On an annual basis, global yarn inventories fell by 3.6 percent due to a strong reduction in Europe (5 percent). In Asia yarn stocks rose by 5 percent” ““Worldwide fabric stocks rose by 0.3 percent in Q1/2015 compared to Q4/2014. Stocks in Asia, Europe, and North America were increased by 0.3 percent, 2.2 percent, and 0.4 percent respectively. Global fabric inventories in Q1/2015 climbed by 0.5 percent year-on-year. While fabric stocks were increased by 0.8 percent in Asia and 0.7 percent in North America, they fell by 0.9 percent in Europe” “In Q1/2015, European yarn orders fell by 2.4 percent quarter-on-quarter and by 5 percent year-on-year. European fabric orders in Q1/2015 climbed by 2.9 percent quarter-on-quarters and by 0.2 percent year-on-year.”” “In 2015-16, stocks are projected to decrease 5 percent to just less than 21 million tons, reducing the excess volume by around 1 million tons. After increasing 16 percent to 9.4 million tons in 2014-15, stocks held outside of China are expected to decrease by 4 percent, to 9 million tons, by the end of 2015-16” “ITMF estimates that yarn production for Q2/2015 is positive in Asia and Europe. The same pattern applies to the estimates for the fabric production for Q2/2015. However, the outlook for Q3/2015 is positive for Asia only. For Europe the outlook seems to have an unchanged development of output” ”