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Industry can expect cotton price hike

Don Hogsett -- Home Textiles Today, December 11, 2000

WASHINGTON -With cotton production slipping at four of the world's six largest growers, and worldwide usage still increasing, creating a big imbalance between supply and demand, U.S. producers of home textiles products could face as much as a 25 percent hike in the cost of this critical raw material.

In its monthly outlook of world cotton production and pricing, the International Cotton Advisory Council, a consortium of 43 cotton producing and consuming nations, forecast that the price of world cotton will skyrocket to 66 cents a pound this year, up from 52.8 cents last year.

And it doesn't stop there, said the trade group. Cotton prices are forecast to jump up another 10.6 percent, to 73 cents a pound, in the 2001/2002 cotton year, creating a heart-stopping two-year jump of almost 40 percent-up 38.3 percent, to 73 cents a pound from 52.8 cents in 1999/00.

Given expected production declines at four big growing nations-India, Pakistan, Uzbekistan and Turkey-world production is now forecast to come in at 18.6 million tons in 2000/01, about 300,000 tons lower than last season, and about 1.3 million tons less than in 1997/98. Providing some relief to the supply side, small production gains are expected in the United States.

With cotton consumption steadily climbing, and production on the wane, "cotton consumption is expected to exceed cotton production by 1.2 million tons this season," said the ICAC.

With push coming to shove, said ICAC, "International cotton prices, as measured by the Cotlook A Index, fluctuated around 61 cents per pound during the first three months of 2000/01, but exceeded 65 cents per pound at the end of November 2000." And that's not the end of it, said the trade group. "Economic fundamentals suggest that declining stocks will result in higher international cotton prices this season," up to 66 cents a pound by the end of this year, and 73 cents next year.

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


1998/99 1999/00 (proj.) 2000/01 (proj.)

Production

18.95

18.63

19.66

Consumption

19.69

19.84

20.23

Exports

6.14

6.39

6.39

Ending Stocks

8.77

7.56

6.99

Cotlook A Price Index

$0.528

$0.66

$0.73


Price measured in U.S. cents per pound. Source: International Cotton Advisory Committee (ICAC)

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