The Cotlook A Index has increased significantly since mid-May 2007. Domestic Chinese prices also increased in June due to tighter domestic supplies and increased domestic demand.
A continued increase in Chinese domestic prices could result in sales of reserve stocks by the China National Cotton Reserve Corporation and/or increased Chinese imports.
World cotton production is forecast at 25.3 million tons in 2007/08, slightly lower than this season. World cotton mill use is projected to increase by 650,000 tons to 26.9 million tons in 2007/08. Asia is expected to consume 4% more cotton in 2007/08 whereas the rest of the world is expected to consume 2% less.
World cotton trade is expected to rebound in 2007/08 to over 9 million tons, up 11% from 2006/07, driven by projected higher Chinese imports. U.S. exports are expected to jump by almost one million tons in 2007/08 to 3.7 million tons.
World cotton ending stocks are forecast to decrease by 13% in 2007/08 to 10.6 million tons. The 2007/08 season-average Cotlook A Index is expected to be above the 2006/07 average.
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International Cotton Advisory Committee
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