Cotton prices to surge as demand grows more
October 20, 2003,
With world cotton consumption exceeding production for a second straight year, cotton prices are forecast to rise in lock step, advancing by roughly 15 percent for the 2003-'04 cotton year, to 64 cents a pound, up from 56 cents a year ago.
The International Cotton Advisory Council (ICAC), a world consortium of cotton growers, said cotton consumption this year is forecast to rise to 21.2 million tons, exceeding production — pegged at 20.2 million tons — by almost 5 percent. Given the stepped-up demand, ending inventories, which decreased by 1.8 million tons last year, are forecast to shrink by another million tons this year, to their lowest level in the past nine cotton growing seasons.
But with higher cotton prices driving increased production, cotton prices are expected to moderate in 2004-'05, declining to 61 cents a pound, as production starts to catch up with demand, ICAC forecast.
Driving much of the stepped-up demand for cotton is China, where bad weather is forecast to hurt this year's cotton crop, forcing China to import more.
Imports by China are now expected to jump up by more than 28 percent this year, to 900,000 tons from 700,000 tons last year.
WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons, except for cotton prices)
|2002/03 (actual)||2003/004 (proj.)||2004/05 (proj.)|
|Source: International Cotton Advisory Council (ICAC)
|Cotlook A Price Index||0.58||0.64||0.61|