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Cotton supply growth drops prices

In good news for home textiles suppliers, who surely can use some, downward pressure is being put on cotton prices by stepped-up plantings in the Northern Hemisphere, which is getting a big lift from favorable weather conditions.

The International Cotton Advisory Committee (ICAC), a consortium of world cotton producers, said cotton prices have declined by 2 cents a pound over the last two months, and were 48 cents a pound by the end of May, after falling by 27 percent, or 18 cents a pound, since last December.

With two months left in the current season, the average season-to-date Cotlook A Price Index now stands at 59 cents a pound, with scant prospects for an increase, said ICAC. "Prices are not expected to rebound without a major crop disaster somewhere in the world, or the announcement of significant imports by Mainland China."

The average Cotlook A Index for the 2000/01 cotton season is now expected to average 57 cents a pound, just 4 cents above last year's season average and well below the 10-year average during the 1990s of 72 cents a pound. "Lower prices are occurring even though world ending stocks will fall below eight million tons, a six-year low, by July 31," said ICAC.

And with production expected to grow more rapidly than demand next season as well, cotton prices are expected to remain below 59 cents per pound in 2001/02 as well, said ICAC.

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)
Production 18.84 18.90 20.07
Consumption 19.78 19.78 20.00
Exports 6.10 5.87 6.30
Ending Stocks 8.80 7.91 7.98
Cotlook A Price Index $0.53 $0.57 $0.59


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