Cotton Prices Surge in February
Cotton prices increased sharply in February 2010. The Cotlook A Index
rose from 75.35 cents per pound on February 1 to 85.55 cents per
pound on February 26. Cotton prices are supported by strong
fundamentals: reduced production and rebounding mill use are expected
to generate a 15% drop in global cotton stocks.
Based on the expected change in the ratio of ending stocks to use
outside China and the average Cotlook A Index to date, the ICAC Price
Model is projecting the 2009/10 Cotlook A Index at 74 cents per
pound, 21% higher than in the preceding season. The 95% confidence
level extends from 69 cents to 79 cents per pound. The daily Index
could remain above 80 cents per pound for some time, but competition
with polyester and the expected increase in 2010/11 cotton production
could cause prices to return to lower levels for the last few months
of the 2009/10 season.
Higher prices paid for 2009/10 cotton, combined with the recent
decline in prices of grains and oilseeds and relatively stable
production costs, will encourage farmers to increase cotton plantings
in 2010/11. World cotton production is forecast to rebound by 10% to
24.4 million tons. World cotton mill use is expected to continue to
recover in 2010/11, growing by 3% to 24.8 million tons, driven by
continued improvement in global economic growth. World cotton trade
is projected to increase slightly in 2010/11 to 7.5 million tons. A
small reduction in cotton ending stocks is expected in 2010/11.
WORLD COTTON SUPPLY AND DISTRIBUTION
2008/09 2009/10 2010/11 2008/09 2009/10 2010/11
Million Tons Million Bales
Production 23.41 22.2 24.4 107.5 102 112
Consumption 23.23 24.1 24.8 106.7 111 114
Exports 6.56 7.3 7.5 30.1 34 35
Ending Stocks 12.33 10.5 10.1 56.6 48 46
Cotlook A Index* 61.20 74** 61.20 74**
* 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
seven months of 2009/10. 95% confidence interval: 69 to 79 cents per
pound.
(Press releases are available via e-mail. For further information,
please contact us at Publications@icac.org)
The International Cotton Advisory Committee is an association of
governments of cotton producing and consuming countries. The
Secretariat of the Committee publishes information related to world
cotton production, supply, demand and prices, and provides technical
information on cotton production technology. Detailed statistics are
found bimonthly in COTTON: Review of the World Situation, $185 per
year. A monthly outlook is available on the Internet for $295 per
year. Access to the weekly estimates of world cotton supply and use
by the Secretariat is also available on the Internet for $460 per
year.