The International Cotton Advisory Committee is projecting that world ending stocks will decline to 52.5 million bales by the close of the current marketing year (July 31) as world consumption continues to outpace production.
The ICAC says world cotton production could fall as low as 118.8 million bales in 2007-2008, a drop of 4 million bales or 3 percent. World consumption, meanwhile, is expected to climb from 122.4 million to 124.6 million bales as China continues to expand its textile sector.
As a result, ending stocks could call from the 58.3 million bales left over from the 2006-2007 marketing year to 52.5 million bales, a decline of nearly 10 percent.
Despite the improvement in world cotton prices of recent months, the ICAC sees little change in cotton acreage in 2008-2009. Farmers are expected to plant within 1 percent of the 83.7 million acres they seeded in 2007-2008.
ICAC is forecasting another acreage decline in the United States of 11 percent while slight increases are expected in China, India, African Franc Zone and Brazil and a stable area is projected for Pakistan, Turkey and Uzbekistan.
“World cotton yields are expected to continue rising in 2008-2009 and are projected to rise 3 percent to 707 pounds per acre,” the ICAC said. “As a result, world cotton production in 2008-2009 is expected to increase by 5 million bales to 123.8 million. However, world mill use is projected to further increase to 126 million bales.”
If realized, the situation would bring a further reduction in world ending stocks to an estimated 50.3 million bales or a decline of 5 percent.
The ICAC's Secretariat, using the ICAC Price Model 2007, forecasts a season-average Cotlook A Index of 67 cents per pound in 2007-2008, 8 cents higher than in 2006-2007. An expected significant decline in the stocks-to-mill use ratio in the World-less-China (Mainland) is pushing prices higher in 2007-2008, it said.