“Rising cotton supplies will feed demand in 2011/12, but high prices and competition from chemical fibers are expected to limit growth in mill use to 3%…World cotton production is projected to exceed mill use in 2011/12 by 1.8 million tons. As a result, ending stocks are projected to increase to 10.1 million tons. The world ending stocks-to-use ratio is projected to rebound from 33% in 2010/11 to 40% in 2011/12, still well below the ten-year average of 50%…The ICAC Price Model forecasts a 2011/12 season-average Cotlook A Index of $1.38/lb. The 95% confidence interval extends from $1.19 to $1.59 per pound. This forecast implies a 15% decline with respect to the 2010/11 expected average of $1.62/lb, but would remain considerably higher than the ten-year average of 60 cents per pound prevailing from 2000/01 to 2009/10. However, caution must be exercised since all commodity markets are subject to great uncertainty. As with any model, the ICAC Price Model is based on a limited number of explanatory variables. Furthermore, the explanatory variables are themselves preliminary estimates or projections obtained under imperfect information.”
Date:4/10/2011
Source:Hurriet Daily News