Demand and Tight Stocks Driving Prices Higher

By Jim.Robinson|September 28, 2010

After declining for three consecutive years, world cotton production is expected to rebound by 16 percent to 114 million bales in 2010/11, encouraged by the significant rise in prices experienced last season, says the International Cotton Advisory Committee.

Global cotton-mill use should also continue to recover, but more slowly than in 2009/10 due to limited available supplies and high prices, to 114.58 million bales. As production and consumption are forecast to roughly balance in 2010/11, world ending stocks are expected to remain stable at 41.25 million bales.

The United States is driving the rebound in global production in 2010/11, with an expected crop of 18.8 million bales, 55 percent larger than last season. Mill use in China is expected to increase only slightly to 45 million bales.

Preliminary forecasts for 2011/12 suggest a continued increase in world cotton area and production, which combined with a small rise in consumption, could result in a tangible increase in global cotton stocks and a decline in international cotton prices.