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Cotton Production Lagging Demand

Driven once again by accelerating demand from China’s textile industry, worldwide cotton consumption is forecast to rise by more than 3% in the new Cotton Year that begins this month, climbing to a record 25.7 million tons and outpacing declining cotton production for a second straight year.

Even with China-driven demand for the fiber still on the rise, production is forecast to decline slightly in 2006-07, to 24.7 million tons from 24.8 million the prior year, creating another growing season of supply-demand imbalance, according to the annual cotton supply and distribution forecast prepared by the International Cotton Advisory Council, a worldwide consortium of cotton producers.

Driving this year’s forecast record cotton use, demand from Chinese mills is projected to jump by 6.1%, or 600,000 tons, to a record 10.5 million tons, putting pressure on other nations’ textile mills and driving up cotton prices.

Scoping out worldwide production trends, the cotton cartel forecast production up in China, India and Pakistan, but “significantly down in the United States.” Moreover, the growers’ trade group said, “With world cotton consumption expected to exceed production by 1.0 million tons, world cotton stocks are expected to decline to 9.8 million tons by the end of the current cotton year, down almost 10% from the preceding year.”

WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons)

Source: International Cotton Advisory Council (ICAC)
2005/06 (ACTUAL) 2006/07 (PROJ.) 2007/08 (PROJ.)
Production 24.75 24.7 26.4
Consumption 24.88 25.7 26.2


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