This significant increase was driven mainly by a rising gap between
declining production and recovering consumption. Global cotton mill use
rebounded faster and stronger than expected after a sharp drop in
2008/09 caused by the global financial and economic crisis, while
global cotton production declined for the third consecutive season. As
a result, global cotton stocks are expected to drop by 18% to 10.4
million tons by the end of July 2010, the smallest level in six years..
The Cotlook A Index jumped to over 90 cents per pound in the last part
of April, after the Indian government announced the suspension of
cotton export registrations and requested that cotton exports already
registered, but not yet shipped, be revalidated, with a monthly cap on
revalidations to be determined. India is the second largest cotton
exporter. It shipped over 1.2 million tons between August 2009 and
March 2010..
World cotton production is forecast up by 13% in 2010/11 to 24.8
million tons, driven by high cotton prices. World cotton mill use is
expected to continue to recover in 2010/11, growing by 2% to 24.8
million tons, pushed by continued improvement in global economic growth
but limited by high cotton prices. World cotton trade is expected to
continue to increase to 7.7 million tons. Global cotton ending stocks
are expected to remain stable in 2010/11..
Based on a price forecast of 77 cents per pound for 2009/10, the ICAC
Price Model forecasts a 2010/11 season-average Cotlook A Index of 85
cents per pound. The 95% confidence interval extends from 71 to 100
cents per pound. This forecast implies a 10% increase with respect to
the 2009/10 forecast. However, caution must be exercised since all
commodity markets are subject to great uncertainty