Global Cotton Mill Use Recovering Faster than Expected

World cotton mill use fell by 12% to 23.3 million tons in 2008/09, driven by

the global economic and financial crisis that resulted in a sharp drop in

consumption of textile products. The Secretariat's projection for 2009/10 has

become more optimistic over the last twelve months, as the global economic

outlook has improved. 2009/10 global cotton mill use is now forecast at 23.9

million tons, up 2.8% from last season. World cotton mill use is expected to

continue to recover in 2010/11, growing by 2.5% to 24.5 million tons, driven

by continued progress in global economic growth.

Higher prices paid for 2009/10 cotton, combined with the recent decline in

prices of grains and oilseeds and relatively stable production costs, should

encourage farmers to increase cotton plantings in 2010/11. World cotton area

is forecast up by 5% to 32.0 million hectares. Assuming an average yield

slightly higher than in 2009/10, world cotton production is expected to

rebound to 24.1 million tons. A small decline in cotton ending stocks is

expected in 2010/11.

World cotton trade is expected to increase slightly in 2010/11 to 7.4 million

tons. Chinese imports are forecast to grow by 15% to 2.1 million tons, driven

by increasing mill use. Exports from the United States are projected up by

10% to 2.6 million tons next season, driven by increased production, whereas

Indian exports could remain stable. For other major exporters, only small

changes in shipments are expected at this stage.

                           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    24.1       107.5    102      111

Consumption          23.28     23.9    24.5       106.9    110      113

Exports               6.56      7.1     7.4        30.1     33       34

Ending Stocks        12.28     10.5    10.1        56.4     48       46

Cotlook A Index*     61.20     72**               61.20     72**

* 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 six months of 2009/10. 95% confidence

interval: 66 to 78 cents per pound.