Cotton prices to jump, again

Staff -- Home Textiles Today, 1/22/2001 12:00:00 AM

WASHINGTON -Even though world consumption of cotton is forecast to grow at a far slower pace this season and next, demand will still outpace supply, driving ending stocks down and cotton prices sharply higher, the International Cotton Advisory Committee (ICAC) reported.

After climbing by 4 percent last season, worldwide consumption of cotton is expected to taper off somewhat, with growth pegged at just 1 percent both this season and next, the ICAC, an international consortium of cotton growing nations, reported in its monthly outlook.

But even with growth slowing, said the ICAC, demand will still exceed supply, forcing ending stocks down to 8 million tons this season and to about 7.6 million tons by the end of the 2001/2 cotton year.

Putting some pressure on pricing, China, because of its declining domestic stocks, is expected to import 300,000 tons of cotton this season and twice that amount next season, the ICAC reported. Based on current estimates of world supply and use and net trade by China, the ICAC forecasted cotton prices will climb about 25 percent this year, to about 66 cents a pound from just 53 cents last year. Prices are expected to jump again next year by another 10.6 percent, to 73 cents a pound, resulting in a two-year increase of 38.3 percent.

ICAC noted, "Consumption of cotton in China seems to be rising at an unusually steep rate as a national policy of stock reduction remains in effect."

But consumption is not rising as quickly in the U.S., the ICAC reports. "Mill use in the U.S.A. is estimated at 2.1 million tons in 2000/01 and 2.05 million tons next season, the lowest since 1990/91."

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

Price measured in U.S. cents per pound.

Source: International Cotton Advisory Committee (ICAC)