Global Cotton Production to Set All-Time High, ICAC Says

By Jim.Robinson|December 2, 2010

In its first forecast for the coming crop year (starting Aug. 1), the International Cotton Advisory Committee (ICAC) has predicted that worldwide cotton production will increase as much as 9.3 percent. With consumption expected to increase by 2.8 percent, the surplus should help alleviate some of the disparity between supply and demand and replenish stocks that reached historic lows this year.

Overall output will increase to 27.3 million tonnes (up from 25 million tonnes this year), while consumption should rise from 24.6 million tonnes to 25.3 million tonnes. If production reaches that level, it will eclipse the previous record of 27 million tonnes set during the 2004/2005 season. That will push worldwide stocks to 11.2 million tonnes by the end of the 2012 season, an increase of 21 percent from the current year.

Should all of those predictions turn out to be accurate, the global stocks-to-use ratio would settle at about 44 percent, which is 6 percent higher than the current year but still lower than the 10-year average of 48 percent. The stocks-to-use ratio is one of the central factors used in the ICAC pricing model, so increasing stocks should herald a decrease in price, but ICAC experts are unable to commit to any more specific information on where prices will go next season.

“Until three or four years ago, we were releasing our pricing forecasts for the following season at this time of year, but we decided to delay the first prediction to the following spring–in this case, May 2011,” Armelle Gruère, a statistician with ICAC, told Cotton International. “Not only do we not know how cotton prices will change over the next few months, we also don’t know what the prices of competing commodities will do during that time period, either. Future prices are a difficult target to hit in any given year, but the current volatility seen in the futures market–characterized by price swings capped only by the exchange limits–makes predictions especially difficult this year.”