The International Cotton Advisory Council (ICAC) says world cotton production in 2002/03 is estimated at about 19 million tons, down 2.5 million tons, or 12 percent, from the record reached in 2001/02. This is the smallest crop in five seasons.
ICAC says world consumption is expected to outpace production by 1.8 million tons in 2002/03, causing world ending stocks to shrink to 8.5 million tons, the lowest in eight seasons.
“In addition to the tighter world cotton supply, net imports (imports minus exports) by China are soaring from 27,000 tons in 2001/02 to an estimated 300,000 tons this season, the highest since 1997/98,” says the group,” a recent ICAC says.
“As a result, the Cotlook A Index rose 10 cents (20 percent) between August 2002 and February 2003 to almost 60 cents per pound, a two-year high.”
World exports are expected to decline by some 150,000 tons from a record of 6.5 million tons in 2001/02, says ICAC. U.S. export shipments are expected to decline slightly to 2.3 million tons in 2002/03, 36 percent of the world total. “Given the drop in the Australian production, the poor crop in Zimbabwe, and the delayed shipments from the African franc zone, a shortage of high quality cotton will prevail until the new crop becomes available,” ICAC says.
“Higher prices will boost world production and stifle the growth rate of world consumption next season,” the group predicts.
Production is projected up by 1.9 million tons, while mill use is forecast up by 300,000 tons in 2003/04, says ICAC. World ending stocks are projected to decline by 250,000 tons, while net imports by China are projected to double, reaching 600,000 tons.
“These market fundamentals suggest that the Cotlook A Index will average 66 cents per pound in 2003/04,” ICAC analyists say.