The Hindu Business Line : `Chinese buys to sway global cotton market'

CHINA's consumption requirement and import demand will be the most important factor to influence the global cotton market in the coming months even as tighter world supplies are expected to boost prices, according to Mr William B. Dunavant Jr, Chairman of Dunavant Enterprises, one of the largest US-based cotton merchants.

In the current year, China's cotton consumption could be in excess of 30.3 million bales, up from 29.5 million bales of last year. The country has announced an import quota of 4.1 million bales equivalent to 8.94 lakh tonnes and the entire quota is likely to be utilized.

Currently, March cotton is trading at 75.70 cents per pound, the low range for which could be 72-73 cents, Mr. Dunavant forecast adding that based on demand and supply fundamentals there was an upside for May at 82 cents.

He reasoned that although more cotton would be produced next year in the US and the world because of high prices, the goods would not be in the market place until November 2004.

Primarily because of high prices a sharp increase in world cotton production next year to a record 102 million bales from 93.1 million bales this year is possible. World consumption will increase 96.7 million bales to 98.8 million bales.

While the world carry-over is projected to rise by 3.2 million bales next year, it cannot be considered to be bearish because no one knows China's consumption and import requirement, the expert opined.