World ending stocks are expected to
remain at 9.1 million tons, while the ratio of ending stocks to mill use
could decrease from 37% to 36%, the lowest since 1989/90. The
tightening of stocks available for mill use has pushed cotton prices
higher. The United States is driving the forecast rebound in
global production in 2010/11, with an expected crop of 4.0 million tons,
52% larger than last season. China and India are expected to account
for most of the increase in global cotton mill use in 2010/11.Imports
are expected to continue to recover in 2010/11, growing by 9% to 8.5
million tons. This increase will be driven by Chinese imports, forecast
29% larger at 3.1 million tons. U.S. exports are projected up by 27% to
3.3 million tons in 2010/11, fueled by the expected larger crop, and the
U.S. share of global exports could rebound from 34% to 39%.The
ICAC Price Model forecasts a 2010/11 season-average Cotlook A Index of
89 cents per pound. The 95% confidence interval extends from 76 to 106
cents per pound. This forecast implies a 15% increase with respect to
the 2009/10 season-average Cotlook A Index. However, caution must be
exercised since all commodity markets are subject to great uncertainty.Beginning
stocks will account for only 27% of world supply in 2010/11, down from
35% in the previous season. The decline in stocks as a percent of supply
suggests that cotton prices in 2010/11 will remain unusually
susceptible to changes in crop prospects.