Growing cotton supply not enough
July 14, 2003,
As China continues to ramp up textiles production and eat up an ever-increasing share of the available cotton supply, world cotton production is expected to increase by seven percent to 20.5 million tons next year, the third largest crop on record, the International Cotton Advisory Committee, a worldwide consortium of cotton growers, reported in a monthly update of its global forecast.
Textiles mill cotton consumption, moving hand in hand with textiles production, continue to migrate to the East as China continues to grow as a global player, and that trend will only accelerate as all quotas on textile and apparel trade are eliminated in another 18 months, said the cotton cartel.
And at the same time that low-cost imports are taking a toll on the U.S. textiles industry, a strong euro vs. other currencies could decimate production in Europe as well, shifting even more production to China and other eastern nations, said the trade group.
"Most of the increase in world cotton consumption at the end-use level is occurring in industrial countries, while increases in cotton mill use are taking place in developing countries," said the cotton growers in a radical transformation of world supply and demand. "As a consequence, net imports of cotton textiles by industrial countries are increasing. The elimination of all quotas on textile and apparel trade, 18 months from now, is likely to accelerate the decline of the spinning industries in industrial countries," said the ICAC.
"U.S. mill use is headed lower because imports of cotton products are rising more than three times faster than the rate of increase in retail sales. The strengthening of the euro against all currencies will have a devastating impact on cotton mill use in the European Union. In contrast, mill consumption is expected to increase by 150,000 tons in China in 2003/04, to an estimated 6.35 million tons," almost a third of the entire world supply of cotton. "Significant increases are also anticipated in India, Pakistan and Turkey."
WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons, except for cotton prices)
|2001/02 (actual)||2002/03 (proj.)||2003/04 (proj.)|
|Source: International Cotton Advisory Council (ICAC)
|Cotlook A Price Index||0.42||0.56||0.63|