Cotton prices may be higher next year

Tag : in cotton

World cotton prices have been ruling firm during the current seasonand are expected to remain even higher next year, saidInternational Cotton Advisory Committee (ICAC), in its latestmonthly update.
Despite higher prices in 2007-08, world cotton production isexpected to decline to 25.48 million tonne in 2008-09 as against26.24 million tonne due to decline in both area and yield. A majordrop in production is forecast in the US with smaller declines inChina, Brazil, Egypt, Turkey and Central Asia. Production increasesare forecast for India, Australia, the African France Zone andPakistan. As for consumption, ICAC stated that due to projectedslower global economic expansion in 2008 and 2009 and higher pricesof cotton relative to polyester, global cotton mill use is expectedto decline by 1% to 26.61 million tonne in 2008-09 as compared tothe estimated 26.76 million tonne this year.
ICAC stated that CotlookA Index increased sharply from 72.2 USCents per pound on June 5 to 81.70 Cents on June 17. This is thesecond time the index crossed 80 cents, the first being in earlymarch when it reached 90 cents, possibly due to increasedspeculation and rising prices of competing commodities. Prices ofmajor competing commodities such as wheat, soybeans and corns aresaid have risen faster than cotton prices during 2007-08.
In addition, fertilizer prices are much higher and this may alsoimpact on cotton which needs high fertilizer doses. All thesefactors may lead to a 1% drop in cotton area to 33 million hectaresnext year compared to 33.4 million hectares this year.
The world average yield is also forecast down by 2% to 772 kg perhectare next year from 785 kg expected this year.