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Cotton prices should tumble in ’05

WASHINGTON — With world cotton production forecast to hit a record high this year, far outpacing consumption and producing an inventory glut, cotton prices are now forecast to skid down by an average of almost 30 percent, to 48 cents a pound from 68 cents a year ago, the International Cotton Advisory Council reported in a monthly update of its annual supply and pricing forecast.

Cotton prices surged sharply higher last year, hitting a six-year high of 68 cents a pound, triggering a sharp increase in worldwide production, the cotton cartel reported. Indeed, the surge in production is now expected to produce a record of almost 25 million tons, this year, up 4.2 million tons, or 20 percent from the previous cotton season.

Cotton consumption is expected to increase as well, but not nearly as fast as cotton production, rising at a far more sluggish pace of 6.4 percent, to 22.5 million tons from 21.2 million last year.

But the pricing situation is expected to right itself the following year as supply and demand come into better balance, the cotton consortium forecast. "Declining cotton prices in 2004 will curtail plantings and stimulate cotton mill use in 2005/06, producing a price increase in 2005/06 to about 59 cents a pound."

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