The Hindu Business Line : Low cotton prices spur consumption

RECORD production in 2004-05, now further revised upwards to a new high of 25.4 million tonnes (mt) - 23 per cent or 4.8 mt more than previous season) - is expected to outpace consumption by 2.6 mt, causing world ending stocks to rise to 10.4 mt.

Current demand-supply fundamentals point to low global cotton prices this season.

The Cotlook A-Index will probably average 52 cents a pound in 2004-05, 16 cents less than the last season, according to the International Cotton Advisory Committee (ICAC).

However, weather aberrations, if any, during the forthcoming planting season in one or more of major producing countries such as the US, China and India can affect the market.

Current low prices, while encouraging consumption this season and the next, is sure to negatively impact global production in 2005-06, which on current reckoning is forecast at 23.1 mt, some 9 per cent or 2.4 mt lower.

As a result, world average prices may rise to 58 cents a pound next season, ICAC said, adding that consumption will reach a record 23.3 mt, marginally ahead of production .

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