its latest report the USDA said cotton consumption will in 2011-12, for
a second successive season, break with history and fall behind world
economic growth, expected to reach 4-5 percent in 2012. ..Traditionally,
the figures have moved in step, a reflection of cotton’s use in
clothing, largely an item of choice, rather than in food, like other
farm commodities. ..Indeed, in the five years before the world recession the world economy expanded by 4.6% a year, and cotton consumption by 4.7%. ..However,
next season, the tie will be broken by mills’ enthusiasm to rebuild
inventories depleted by the shortfall in supplies this season, and a
slowdown in clothing demand as soaring cotton prices, which hit a record
earlier this month, feed through to retailers. ..High prices will
also provoke a continued shift demand to polyester, which is roughly
twice as cheap compared with cotton as it was five years ago. ..The
consumption lag, coupled with the prospect of a cotton values inspiring
a strong rebound in production, will enable world inventories to jump
by 17.5% to 50.3m bales. ..At this level, stocks would represent
42% of consumption, a large rise on this season’s 32% figure, but “low
relative to the recent average”, Mr Johnson told the USDA Outlook Forum.
..The stocks-to-use ratio, a widely used metric for gauging the
availability of a crop and therefore its pricing potential, suggested a
drop in values, as measured by the Cotlook A index from an average of
175 cents a pound in 2010-11 to 1.35 cents a pound next season. ..The index stood at 209.30 cents a pound on Friday, down 6.45 cents on the day, and below a record high hit earlier this month. ..And
cotton prices may fail to revisit their highs, if falling prices
encourage farmers, who have been stockpiling the fibre in the hope of
selling out at the top, to cash in, Rabobank analysts said. ..”The
possibility exists that the declining values actually encourage selling
by producers who are worried about further price weakness,” the bank
said. ..”A surge in selling along with likely bullish indications
of large northern hemisphere plantings may mean that, without a
disruption in production, values may find it difficult to revisit the
recent highs.” ..Nonetheless, the fibre was set to find support
from bargain-hunting speculators, and from trade buyers, “once it looks
like prices have bottomed out”. ..And with supplies thin until the
next harvests are in the bag, “volatility and sharp moves are likely to
continue over the coming months”. ..In New York, cotton for March delivery gained 2.2% to 185.34 cents a pound, looking for its first rise in five trading days. .The better-traded May lot was 1.9% up at 180.52 cents a pound. ”