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Cotton price acceleration predicted

Washington -- With Chinese textile plants expected to exhaust about 40% of worldwide cotton consumption during the 2006/07 cotton year, and consumption still exceeding production around the globe, prices for the basic raw material of textiles products are forecast to edge up about 1.8% this year, before jumping up at a double-digit pace during the 2007/08 cotton year.

In its monthly update, the International Cotton Advisory Council (ICAC) projects cotton prices during the current cotton year will average about $0.57 a pound, up slightly less than 2% from last year's $0.56 a pound. But with demand growing faster supply, prices are expected to race up by 10.5% next year to $0.63 a pound, the ICAC said.

This year, production is forecast to rise by 1.3% to 25.0 million tons. But demand is growing more than twice as fast, by a forecast 3.2% this year to 25.6 million tons. Consumption by Chinese textile plants is forecast at 10.2 million tons, accounting for a record 40% of all the cotton used in the world.

"Production is forecast to reach record levels in both China , 6.5 million tons, and India , 4.6 million tons," said ICAC. "However, production is expected to decrease in the United States , to 4.5 million tons, and Pakistan , to 2.0 million tons."

China is something of a question mark, the ICAC said. "There is significant uncertainty regarding projected 2006/07 Chinese imports due to lack of info rmation on Chinese consumption and the intention of buying or selling cotton," from the China National Cotton Reserves Corporation, which holds its hand on the spigot, controlling the flow of cotton into and out of China.

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