ICAC Press Release, January 4, 2010

ICAC Press Release, January 4, 2010

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Production and Consumption Rising in 2010/11

2010/11 world cotton production is forecast at 24.2 million tons up nearly

10%. 2010/11 production in China is forecast at 7.7 million tons, one million

tons higher than in the current season. Most of the gain is expected to come

from increased area in response to higher domestic prices. 2010/11 Production

in India is estimated little changed from 2009/10 as most of the gain in

yields tied to improved technology has already been achieved. U.S. production

is expected to climb by one-tenth to reach three million tons, primarily

because of increased cotton area. Production in Pakistan, Brazil and

Uzbekistan, collectively, is estimated at 4.6 million tons in 2010/11. The

three countries are accounting for 4.3 million tons of production in 2009/10.

Forecasts by the IMF, UNCTAD, the U.S. Federal Reserve and OECD all indicate

that the recovery in world GDP growth during 2010 and 2011 will be gradual.

Accordingly, since income growth is an important explanatory variable in

models of fiber use, projections of world fiber use at the consumer level for

2010 and 2011 indicate only modest growth.

Based on the expected change in the ratio of ending stocks to use outside

China and the average Cotlook A Index to date, the 2009/10 Cotlook A Index is

estimated at 70 cents per pound. The 95% confidence level extends from 64

cents to 77 cents.

  WORLD COTTON SUPPLY AND DISTRIBUTION

                    2008/09  2009/10  2010/11  2008/09 2009/10 2010/11

                            Million Tons           Million Bales

Production            23.40    22.2    24.1     107.5    102    111

Consumption           23.24    23.8    24.2     106.7    109    111

Exports                6.56     7.1     6.9      30.1     33     32

Ending Stocks         12.34    10.75   10.75     56.7     49     49

Cotlook A Index*      61.20   70**               61.20    70**

* Season-average Cotlook A Index (U.S. cents per pound).

**  The price projection for 2009/10 is based on the ending

stocks/consumption ratio in the world-less-China in 2007/08 (estimate), in

2008/09 (estimate) and in 2009/10 (projection), on the ratio of Chinese net

imports to world imports in 2008/09 (estimate) and 2009/10 (projection), and

on the average price for the first four months of 2009/10. 95% confidence

interval: 64 to 77 cents per pound.

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