Cotton Prices Fall in April, Mill Use to Increase in 2011/12
June 8, 2011 The International Cotton Advisory Committee Secretariat released cotton stock data and forecasted where cotton production is going for 2011/12.
After seven consecutive months of increase, cotton prices fell in April 2011 and have since stabilized at levels that remain very high by historical standards. This season started with a firm demand from spinning mills, which were looking to rebuild their stocks depleted in 2009/10, but is ending with weaker demand, mainly due to high cotton prices. Global cotton mill use is projected to reach 25.0 million tons in 2010/11, almost unchanged from 2009/10.
Global mill use is expected to resume increasing in 2011/12, driven by a projected robust global economic growth and boosted by increased production, but moderated by relatively high cotton prices and competition from chemical fibers.
As a result of higher prices in 2010/11, global cotton area is forecast up by 8% to 36.3 million hectares in 2011/12. Assuming a small increase in yield, global production could reach 27.3 million tons, 9% more than in 2010/11.
World cotton production is projected to exceed mill use by 1.6 million tons in 2011/12. As a result, ending stocks are expected to jump from 8.7 million tons at the end of July 2011 to 10.2 million tons by the end of July 2012. The world ending stocks-to-use ratio could rebound to 40% in 2011/12.
The Secretariat believes that the season-average Cotlook A Index will decline significantly in 2011/12, although it will probably remain above the ten-year average of $0.60 per pound. It is also possible that price volatility, which has been extremely high this season, will decline in 2011/12, as increased global cotton supplies may give more confidence to market players.
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