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USDA: GLOBAL COTTON MILL USE SUSTAINS UNPRECEDENTED DECLINE AS COVID-19 IMPACT UNFOLDS
Source: USDA news release



Cotton mill use generally tracks global economic activity. When the global economy weakens—as during the COVID-19 pandemic—consumers often defer purchases of items such as clothing, and the associated industries adjust operations accordingly.

For the textile and apparel industry, these adjustments have included temporary closures or substantial reductions in manufacturing operations, as postponement or cancellation of orders have had ripple effects throughout the entire supply chain, from raw fiber procurement to retail sales.

The developing global economic slowdown has significantly reduced world cotton demand for marketing year (MY) 2019 (August 2019-July 2020).

Although June’s global mill use forecast is at a 16-year low, the projected year-over-year decrease is of historic proportion—down nearly 15 percent—and unmatched during the past century.

World cotton mill use has declined more than 5 percent year-over-year in only 10 other years since MY 1920, with most of those reductions associated with global recessions, including the Great Depression.

More recently, uncertainty surrounding the global financial crisis significantly limited world cotton demand in MY 2008, while a dramatic run-up in MY 2010 cotton prices to levels not experienced since the U.S. Civil War hampered mill use in MY 2011.

While the overall severity of the COVID-19 pandemic remains unknown, the immediate shock to global cotton mill use has been historically significant.

This information and the impacts on global cotton supply and demand are discussed in the Economic Research Service’s Cotton and Wool Outlook report for June 2020.


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