Cotton prices continue to come down
October 12, 2001,
With world cotton production still far outpacing cotton consumption, international cotton prices continue to tumble, providing much needed relief to the U.S. textiles industry.
The laws of supply and demand being as rigid as they are, when a company makes more of a product than people are buying, it ends up on the markdown table, and that's good news right now for U.S. textiles mills, most of whom failed to make money last year.
Currently, the ICAC is forecasting world production at 20.89 million tons during the current 2001/02 cotton year, about 5 percent more than projected consumption of 19.91 million tons, which could leave almost a million tons of cotton sitting in warehouses around the world.
"With world production en route to a record level, concern has now turned to the decelerating world economy, the global political developments of September 2001 and their impact on the world's textile industry," said the ICAC.
The ICAC noted that "lower economic expansion during the first half of 2001 affected world cotton consumption, which declined by 75,000 tons to 19.7 million tons in 2000/01. The decline in mill consumption of cotton was concentrated in industrial countries, where domestic industries find it hard to compete with lower-priced imported products, while increases took place in developing countries and in the former USSR."
WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons, except for cotton prices)
|1999/00 (actual)||2000/01 (proj.)||2001/02 (proj.)|
|Source: International Cotton Advisory Council (ICAC)
|Cotlook A Price Index||$0.57||$0.46||$0.48|