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Cotton prices pick up slightly

After collapsing to their lowest level in almost 30 years by the end of October cotton prices are starting to recover, but are still forecast to remain at historically low levels through most of 2002, providing a measure of relief to the American textiles industry, if not to hard-hit cotton growers.

For the entire 2000/01 cotton year — which is based on the growing season — cotton prices finished at an average 57 cents a pound, and are forecast to decline even further this year, by more than 19 percent, to 46 cents a pound, before ticking up again in 2002/03, according to the International Cotton Advisory Council (ICAC).

By the end of October, cotton prices had dropped to their lowest level since 1972, to just 35 cents a pound, but recovered in November, rising by 22 percent to just below 43 cents a pound. Nonetheless, said the ICAC, prices remain more than 40 percent below the long-term average of 72 cents a pound.

World cotton production is now estimated at a record level of 20.9 million tons in 2001/02, about 1.6 million tons, or 8 percent higher than last season, according to the ICAC. Increases in production are expected to take place in five out of the six largest northern hemisphere producers — mainland China, the United States, India, Uzbekistan and Turkey. "Output will probably decline in Pakistan," said the ICAC.

But the amount of land devoted to growing cotton is expected to shrink, said the ICAC. "In reaction to the historically low cotton prices and by more attractive returns from competing crops, cotton area is forecast to decline by 19 percent, or 550,000 hectares, to 2.4 million hectares in 2001/02, and production is expected to fall by 400,000 tons, to 1.8 million tons," said the ICAC.

World consumption of cotton is expected to slide by some 50,000 tons, said the ICAC, to 19.6 million tons in the current cotton year. World ending stocks are projected to increase by 1.3 million tons to a level of 9.9 million tons.

Providing a lift to cotton prices in 2002/03, cotton consumption is expected to outpace production, rising by 1.5 percent.

WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons, except for cotton prices)

2000/01 (actual) 2001/02 (proj.) 2002/03 (proj.)
Source: International Cotton Advisory Council (ICAC)
Production 19.26 20.86 19.64
Consumption 19.65 19.59 19.89
Exports 5.74 6.17 6.26
Ending Stocks 8.63 9.90 9.65
Cotlook A Price Index $0.57 $0.46 $0.49


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