US cotton stocks to fall sharply by July 2009, NCC
12 Feb '08
3 min read
Regarding world trade, Adams said world production is expected to increase to 122.4 million bales in 2008 as larger crops in China, Brazil, India, Pakistan, Australia and West Africa more than offset lower U.S. production. India, in fact, is now the second largest producer and processor of cotton, devoting more area to cotton production than any other country.
“While their textile industry has been expanding, the most notable development in the Indian market is cotton production that has more than doubled in the last five years, and is estimated at almost 25 million bales in 2007,” Adams said. He said India's production growth is largely the result of improved yields, which have soared from a 270-lb. per acre average in 2002 to more than 500-lbs. in 2007.
He said the NCC sees India producing more than 26 million bales in 2008 and expects them to remain a significant exporter – perhaps as much as 7 million bales.
On the demand side, Adams said even with slower growth in China mill cotton use, that country's textile sector still could consume a healthy 57 million bales – 16.6 million bales imported -- in the 2008 marketing year. He said China also will continue to be the largest export customer of U.S. cotton.
“Demand (world) is expected to grow but at a slower pace due to overall economic performance and strength in cotton prices relative to competing fibers,” he said. “However, total use is expected to exceed production, which will further tighten stocks.”
Adams said declining global stocks should continue to be supportive of world prices in 2008, but, “One concern will be the ability to maintain demand growth at higher price levels, particularly in light of concerns about the general economy. In addition, the gaps between cotton prices and yarn prices and polyester prices have widened. So, while the current outlook is supportive of prices, we can not forget the competition from manmade fibers. ”
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