A slumping real estate market could affect cotton consumption in two ways. First, the inability to extract additional equity out of homes would limit consumer spending and second, the fact that less homes are being built and resold could impact the purchase of home textiles.
The question is how much of a drop in cotton consumption may we expect, if at all? In 2005, the amount of cotton products consumed in the US economy amounted to around 23.3 million bale equivalents. A 5 percent drop in retail cotton consumption would therefore translate into slightly more than a million bales.
However, since China's retail consumption is still rising at around 13-14 percent, with clothing actually increasing at over 18 percent, it would more than offset such a drop in the US. Last season, Chinese end-user consumption of cotton products was estimated at around 5.6 million tons or 25.7 million bale equivalents, which means that even a 10 percent annual growth rate still translates into an additional 2.5 million bales.
Taken together with other rapidly expanding economies, such as India, it is difficult to see how the absolute level of cotton consumption should drop in the coming season. While the rate of growth is likely to slow, we should still see more bales of cotton consumed next season, unless the global economy takes a really nasty turn.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
