Declining cotton production will lead to higher prices in 2013-14

Commodities , Cotton Dec 05, 2012 No Comments

CottonGlobal cotton production will decrease by 11 percent to 23.2 million tons (106.56 million bales) in 2013-14 due to lower cotton prices and increased attractiveness of competing crops”, says the International Cotton Advisory Committee (ICAC) in its latest market outlook published this week.

Cotton values have fallen by two-thirds from their all-time highs reached in March 2011, depressed by the run-up in inventories encouraged by higher values. The prospect of a dip in cotton production follows assessments by US Department of Agriculture officials of the implications of low prices working their way through to southern hemisphere growers, in countries such as Australia and Brazil.

This would be the second consecutive season of decline in cotton production and the smallest output in four years. The production is expected to fall sharply in the United States and Turkey, where competition with grains and soybeans is strong. Smaller crops are also projected in China, Pakistan, Central Asia and Francophone Africa. The Indian cotton production is likely to be slightly down.

Consumption will continue to increase by an estimated 3% and stocks are expected to fall by 6% to 15.6 million tonnes in 2014. A reduction in production combined with an increase in consumption should logically lead to a rise in cotton prices.

 

The International Cotton Advisory Committee (ICAC) is an association of governments of cotton producing, consuming and trading countries. Its mission is to assist governments in fostering a healthy world cotton economy. The Committee achieves its mission by providing transparency to the world cotton market, by serving as a clearinghouse for technical information on cotton production and by serving as a forum for discussion of cotton issues of international significance. The role of the ICAC is to raise awareness of emerging issues, provide information relevant to the solving of problems and to foster cooperation in the achievement of common objectives. By serving as an objective statistical observer and by bringing together both producing, consuming and trading countries and all segments of the cotton industry, the International Cotton Advisory Committee serves a unique role as a catalyst for constructive change.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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