Cotton prices set to rise

The cotton prices in the global market is likely to rise due to the gap between the demand and supply and competing crops like soyabeans, corn, wheat and oilseeds, the U S based International Cotton Advisory Committee (ICAC) said.

In its projections for 2008-2009, global cotton prices may rise in the range of 8% to 80% despite relatively stable area under cotton cultivation. "Based on the trends in prices during the first eight months during 2007-08, it is obvious that prices will be higher," ICAC, said in a statement. ICAC is an association of 44 cotton producing countries including India.

It said that due to increase in prices of competing crops, the increasing role of speculative activity and commodity investment funds might be affecting cotton prices in ways that are not reflected in fundamental measures of cotton supply and use.

According to the ICAC data, cotton production is estimated to go up by 3.17% to 123.4 million bales during 2008-09 against 119.6 million bales in the previous year. Consumption is projected at 126.2 million bales, up by 1.28% from previous year.

The world cotton area is expected to remain relatively stable in 2008-09 at 33.8 million hectares. However, cotton harvested area in the US is projected to decline by a further 15% in current season as a result of surging prices for soybeans, corn, wheat and other oilseeds.

The United States Agriculture Department (USAD) in February 2008 had said that India's cotton production was around 24.5 million bales during 2007-08. India may export about 5.7 million bales. The department also said that India's production during 2008-09 would be more than 26 million bales and export might cross seven million bales. India has emerged as a top competitor of US cotton exporters to China, the world's top consumer of cotton. In 2007-08, China is expected to import 13.5 million bales of cotton. Demand for cotton, will remain a concern because of fears a US recession could severely dent global fibre consumption.