Cotton prices forecast higher as demand swells

Putting intensified pressure on already hard-pressed textiles producers — and their cash flow and margins — cotton prices are forecast to rocket up by 33.3 percent for the crop just planted, to 56 cents a pound from an average of 42 cents for last year's crop.

And prices are forecast to climb even higher next year, climbing by another 8.9 percent, to 61 cents a pound.

"2003 plantings in the Northern Hemisphere started with international cotton prices at their highest level, at this period of the year, since 1998," reported the International Cotton Advisory Council (ICAC), a worldwide consortium of cotton growers.

Spurring the price increase is a slump in cotton production coupled with stepped up demand. Driving the production decline, cotton growers have planted fewer acres in response to historically low cotton prices.

The wild card in the cotton-pricing equation is China, which has lately been gobbling to feed its plants. China's cotton imports jumped up more than 12-fold this year, and are forecast to double again next year, said the cotton growers' cartel.

WORLD COTTON SUPPLY AND PRICING FORECAST
(in millions of tons, except for cotton prices)

2001/02 (actual) 2002/03 (proj.) 2003/04 (prof.)
Source: International Cotton Advisory Council (ICAC)
Production 21.52 19.17 21.13
Consumption 20.20 20.92 21.07
Cotlook A Price Index 0.42 0.56 0.61


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