LOWER WORLD COTTON PRICES IN 2011/12
The season-average Cotlook A Index reached a record of $1.64 per pound in 2010/11, twice as high as the 2009/10 average. However, the season-average A Index will decline in 2011/12, as an increase in production will replenish stocks.
World cotton production is expected to rise by 8% to 26.9 million tons in 2011/12, driven by the high cotton prices received by farmers in 2010/11. Production will rise in most large producing countries, with the exception of the United States. Production could reach records in India and Australia. Despite a significant increase in U.S. planted area, severe drought conditions in Texas will not only increase abandonment but also limit yields. U.S. cotton production is forecast at 3.5 million tons in 2011/12, down 12% from the previous season.
World cotton mill use is expected to resume increasing in 2011/12 if projected global economic growth materializes, boosted by increased availability of cotton, but moderated by relatively high cotton prices and competition from chemical fibers. Cotton mill use is forecast at 25.0 million tons in 2011/12, 2% up from last season.
As a result of the surplus of 1.8 million tons expected in 2011/12, world ending stocks could rebound by 20% to 10.9 million tons. The global stocks-to-use ratio could recover from 37% in 2010/11 to 43% in 2011/12.
WORLD COTTON SUPPLY AND DISTRIBUTION
2009/10 2010/11 2011/12 2009/10 2010/11 2011/12
Million Tons Million Bales
Production 22.0 25.0 26.9 101 115 123
Consumption 25.2 24.5 25.0 116 113 115
Exports 7.8 7.6 8.0 36 35 37
Ending Stocks 8.5 9.0 10.9 39 41 50
Cotlook A Index* 0.78 1.64 0.78 1.64
* Season-average Cotlook A Index (U.S. $ per pound).
