September 19, 2012

World's 2012-13 cotton prices forecast to fall 14%

As measured by the Cotlook A Index, global cotton prices will fall by around 14% to an average of US$0.86 a pound in the 2012-13 marketing year.

The Cotlook A Index is a global indicative price for cotton based on spot market quotations.

According to the Australian government's Bureau of Agricultural and Resource Economics and Sciences forecast Tuesday (Sep 18), it reflects expectations that cotton inventories will rise as global production outpaces demand for a third-consecutive year in the year that started August 1, Abares said in its quarterly agricultural commodities report.

Global closing stocks of cotton are forecast to increase by around 9% in 2012-13 to a record 16.1 million tonnes, it said.

Meanwhile, 2012-13 cotton exports may drop by as much as 13.5% to 8.3 million tonnes, due to a sharp decline in imports by China and greater domestic demand by some producing countries, Abares said.

China's 2012-13 cotton imports will likely total around 2.8 million tonnes, a decline of 46%, after the country imported large volumes last marketing year to build its reserves, Abares said.

China is the world's largest cotton producer, consumer and importer. In 2011-12, its stocks almost tripled to six million tonnes, the International Cotton Advisory Committee said last month.