ICAC: Cotton Supply is Tight
A decline in global production and a rebound in mill demand have cotton supplies at a tight level.
July 6, 2010
As a result of a continued decline in world production and a concurrent rebound in global mill use, 2009/10 global cotton ending stocks are projected at 44 million bales, down by 21 percent from the previous season and the smallest level of stocks since 2003/04.
The global stocks-to-use ratio is also falling, dropping from 52 percent in 2008/09, to 39 percent in 2009/10, the lowest ratio since 1993/94.
Supplies of cotton will remain tight until the start of the harvest of the new crop in the northern hemisphere in August.
World cotton production is expected to rebound by 14 percent in 2010/11, to 115 million bales. The forecast for a larger crop is explained mainly by an expansion in cotton plantings as farmers are reacting to the rise in cotton prices during 2009/10, and the declining prices of grains and oilseeds.
World cotton mill use is projected to continue to recover in 2010/11, growing by 2 percent to 114 million bales, pushed by continued improvement in global economic growth, but limited by high cotton prices and a slowing “restocking effect.”