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Domestic cotton output to be down 10%
14
Dec '09
The Cotlook A index (an indicator of world cotton prices), continued to increase in November reaching 74.05 US c/lb on 30 November, up 16% from 1 August. The International Cotton Advisory Committee's (ICAC) price model is now forecasting a 13% increase in the average Cotlook A index for 2009/10. The latest A index estimate for 2009/10 of 69 US c/lb is 2 US c/lb up from last month's forecast.

The ICAC forecasts world cotton production to decrease by about 5% to 22.2 million tons in 2009/10 mainly due to lower yields as well as a decrease in the price-competitiveness of cotton against competing crops. The ICAC believes that world cotton yields have entered a period of slow growth which might last several years.

The ICAC expects world cotton mill use to recover by about 2% to 23.8 million tons in 2009/10, based on an expected recovery in world economic growth. Only Asian cotton consuming countries (whose combined share of world cotton use is estimated at 70%) are expected by the ICAC to experience growth in mill use in 2009/10.

The ICAC forecasts world cotton trade to increase by about 6% in 2009/10 to 7 million tons. Chinese imports are expected to increase by about 15% due to a smaller cotton crop. Exports from India are expected to rebound to 1.4 million tons due to a large exportable surplus whilst USA exports will decline by about 21% according to the ICAC.

The ICAC also forecasts world cotton ending stocks to fall by 13% to 10.7 million tons by the end of July 2010, which would be the largest decline in 7 years. Half of the decline is expected in China and the other half in the rest of the world.

Looking towards prospects for 2010/11, the ICAC expects that the current higher prices combined with an increase in the competitiveness of cotton against grains and oilseeds would lead to an estimated 8% increase in cotton production in 2010/11.

Local outlook:
As far as the local outlook is concerned, the final estimate for the 2008/09 production year indicates a total crop of 44,922 lint bales, 10% down from the previous season. About 42,024 lint bales are estimated to be produced from RSA produced seed cotton, 14% down from the previous season.

The balance of 2,898 lint bales relates to Swaziland produced cotton ginned by the Swaziland gin (2,832 lint bales) and seed cotton purchased from Botswana by a local gin. First preliminary estimates for the 2009/10 production year indicate a crop which will more or less be unchanged from this season.

Click here to view consumption, export and output figures.

Cotton South Africa

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