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Mr Ray Butler, President, International Cotton Association, Liverpool, today said that cotton prices during the next season would continue to remain exceptionally high in the international market. ‘But, it is not an aberration', he added
Speaking at a seminar on cotton, organised jointly by the Southern India Mills' Association (SIMA) and the South India Cotton Association (SICA) with the ICA at the Residency here, he said with the global consumption going up and with production stripping consumption, the period ahead could be very challenging.
“While some think that the prevailing high price is an aberration, I think we have moved away from the last decade in prices. I don't believe it is an aberration. Higher prices are here to stay,' he reiterated.
Crop damage
Recalling the cotton scenario in the recent past, Mr Butler said, “due to rising yarn prices, cotton consumption in many countries slipped by switches to other fibres or lack of cotton availability. This is due to the demand supply mismatch caused by crop damage in major cotton producing countries such as the US, China, Pakistan etc, coupled with lower stocks, increased consumption and exports. The final mixes are being adjusted in some markets though.”
Citing the ICA's revised cotton figures published last week, he said “adjustment though is more towards consumption of cotton, despite declining world stocks. Global utilisation of polyester fibre has increased more than two million tonnes, but cotton producers are looking to take advantage of the price behaviour.”
Supply-demand
Reverting to the supply demand position, he said, “world production in 2007-08 to 2009-10 showed a decline of around 17 per cent. Such reductions were not foreseen, but the weather developments in some countries adversely impacted cotton production.
Global cotton consumption also suffered a setback by over 10 per cent in 2009-10, but it recovered swiftly and consumption went up almost to the pre-financial crisis level.
This resulted in a sharp decline in stock position and there was an imbalance of how much the world was producing and consumption volume.”
On crop production estimates for 2011-12, he said, “it could be around 27.6 million tonnes, which is roughly 3.5 million tonnes over 2010-11 production. Consumption is expected to go up 4.4 per cent to 26.4 million tonnes.”
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