World cotton output down, forecast for 2005/06 lower, says ICAC

02 Jul '05

4 min read

World cotton production is forecast to fall below 24 million tons in 2005/06, down 2.4 million tons but still the second largest crop on record, says ICAC press release.

World consumption is expected to reach an unprecedented 23.8 million tons in 2005/06, 550,000 tons more than in the current season. With China (Mainland)'s imports projected to more than double during 2005/06, climbing to 2.8 million tons, world cotton trade is forecast to surpass 8 million tons for the first time.

These market fundamentals suggest that the season-average Cotlook A Index will be 65 cents per pound in 2005/06, 13 cents more than the average expected for 2004/05. Initial projections for 2006/07 indicate that production will rise to 24.7 million tons, slightly above consumption. The season-average Cotlook A Index is expected to remain between 60 and 70 cents per pound for a second season.

Attention continues to focus on the direction of China (Mainland)'s policy regarding cotton imports and textiles and apparel exports and its potential influence on the market. After the elimination of all quotas on textiles and apparel trade among WTO members on January 1, 2005, Chinese exports in the largest import markets, the U.S. and the EU, skyrocketed.

China (Mainland) concluded an agreement with the EU, whereby a new quota system will come into effect on July 20, 2005 to limit the annual growth in exports of various categories of textiles and apparel to the EU. TheChinese Ministry of Commerce will issue export licenses based on companies' exports during the previous 12 months.

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