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Cotton output to fall in current season
13 Feb '10
2 min read
According to The International Cotton Advisory Committee (ICAC), world cotton production for 2009/10 is projected at 22.2 million tons, a decrease of 5% over the previous season mainly due to lower yields. As a result world cotton stocks are expected to decline by 14% to 10.5 million tons by July 2010, which would be the lowest level in 6 years.
Based on the above and the expectation that world cotton use will grow by 2.8% in 2009/10 to 23.9 million tons, the ICAC's price model is forecasting an 18% increase in the average Cotlook A index (an indicator of world cotton prices) for 2009/10. The latest A index estimate for 2009/10 of 72 US c/lb is 2 US c/lb up from last month's forecast.
The higher prices paid for cotton in 2009/10, combined with the recent decline in grain prices will however encourage farmers to increase cotton plantings in 2010/11 according to the ICAC. World cotton area for 2010/11 is expected to increase by about 5% and assuming an average yield, cotton production is forecast by the ICAC to rebound to 24.1 million tons, an increase of about 9% over 2009/10.
The ICAC also expects world cotton consumption to continue to recover, growing by 2.5% to 24.5 million tons in 2010/11. Most of the growth however will be in Asia, South America and Turkey.
Although the ICAC forecasts world cotton trade to increase only slightly in 2010/11, Chinese imports is expected to increase by about 15% to 2.1 million tons, driven by increased mill use. Exports from India are expected to remain stable in 2010/11 but USA exports are forecast to increase by 10% mainly driven by increased production.
Local outlook:
As far as the local outlook is concerned, the 1st estimate for the 2009/10 production year indicates a total crop of 41 261 lint bales, 8% down from the previous season and the smallest crop since the early sixties.
About 37,841 lint bales are estimated to be produced from RSA produced seed cotton, 10% down from the previous season. The balance of 3,420 lint bales relates to Swaziland produced cotton ginned by the Swaziland gin.
Click here to view report.
Based on the above and the expectation that world cotton use will grow by 2.8% in 2009/10 to 23.9 million tons, the ICAC's price model is forecasting an 18% increase in the average Cotlook A index (an indicator of world cotton prices) for 2009/10. The latest A index estimate for 2009/10 of 72 US c/lb is 2 US c/lb up from last month's forecast.
The higher prices paid for cotton in 2009/10, combined with the recent decline in grain prices will however encourage farmers to increase cotton plantings in 2010/11 according to the ICAC. World cotton area for 2010/11 is expected to increase by about 5% and assuming an average yield, cotton production is forecast by the ICAC to rebound to 24.1 million tons, an increase of about 9% over 2009/10.
The ICAC also expects world cotton consumption to continue to recover, growing by 2.5% to 24.5 million tons in 2010/11. Most of the growth however will be in Asia, South America and Turkey.
Although the ICAC forecasts world cotton trade to increase only slightly in 2010/11, Chinese imports is expected to increase by about 15% to 2.1 million tons, driven by increased mill use. Exports from India are expected to remain stable in 2010/11 but USA exports are forecast to increase by 10% mainly driven by increased production.
Local outlook:
As far as the local outlook is concerned, the 1st estimate for the 2009/10 production year indicates a total crop of 41 261 lint bales, 8% down from the previous season and the smallest crop since the early sixties.
About 37,841 lint bales are estimated to be produced from RSA produced seed cotton, 10% down from the previous season. The balance of 3,420 lint bales relates to Swaziland produced cotton ginned by the Swaziland gin.
Click here to view report.
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