Cotton prices still low say ICAC

02 Dec '05

2 min read

International Cotton Advisory Committee reported about cotton prices.

Over the last two decades, the most important single variable affecting season-average international cotton prices was net cotton imports by China (Mainland). Chinese cotton imports are forecast at a record 3.2 million tons in 2005/06, more than double last year's figure.

This is expected to positively affect international cotton prices. ICAC forecasts that the Cotlook A Index will average 65 cents per pound in 2005/06, up 13 cents from last season. However, over the first four months of the 2005/06 season, the actual Cotlook A Index averaged only 55 cents per pound.

World cotton production is estimated at 25 million tons in 2005/06, 5 percent less than last season but still the second highest on record. Most cotton has been harvested in the northern hemisphere. Production in China (Mainland) is estimated at 5.8 million tons, 9 percent less than last season due to decreased plantings and yields. Production in the United States is estimated at about 5 million tons, almost the same as last season.

Production in India is expected up 3 percent to 4.25 million tons due to increased planting, a result of the significant increase in productivity last season. Production in Pakistan is estimated down 11 percent due to decreased yields, as weather conditions have been less favorable than last year.

Planting has started in the southern hemisphere. Cotton area in Brazil, Australia, and Argentina is expected to decrease significantly this season, due mainly to the currently low cotton prices. Overall, production in the southern hemisphere could fall to 2.2 million tons this season, 400,000 tons less than last season.

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