The Hindu Business Line : Global cotton prices seen firm next year

WORLD cotton prices are expected to bounce higher next year from the current levels following expectation of decline in crop size from this year's record high levels.

On current reckoning, based on market fundamentals, Cotlook A-Index is projected to average 57 cents a pound for 2005-06, up 4 cents from the current year.

With China forecast to raise its import to record levels, and mill consumption in India and Pakistan expected to exceed domestic production, global cotton imports are projected to expand by one million tonnes (mt) to a new high.

World cotton trade is set to rise to a new high of 8 mt in 2005-06, up 15 per cent from the previous year, according to the latest assessment of Washington-based International Cotton Advisory Committee (ICAC), which said China will have to import a record 2.8 mt to cover the shortfall between domestic production and consumption.

World cotton output is forecast to decline to 23.2 mt next year, down 2.7 mt on account of a possible 6 per cent decline in area under cultivation.

High prices of crude have made chemical fibres expensive and cotton is seen price competitive with chemical fibres.

Nonetheless, world cotton consumption is likely to grow at a slower pace next year and may reach 23.6 mt, up half a million tonnes, ICAC said.

World stocks at the end of the current season on July 31, 2005 are projected at an all-time high of 10.7 mt.

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