China (Mainland) Remains Key to Cotton Prices04.06.2005Le commerce international

From the Secretariat ICAC Press Release, June 1, 2005

World production is skyrocketing to 26.1 million tons in 2004/05 (up
26%), outpacing world consumption (up 9%) by an estimated 2.9 million
tons, the highest gap in twenty seasons. The Cotlook A Index is
forecast to average 53 cents per pound in 2004/05, down fifteen cents
from a six-year high in 2003/04. The current level of international
prices implies a reduction in world production in 2005/06. World
production is forecast to decline to 23.4 million tons in 2005/06, down
2.7 million tons (10%) from the record this season, but still the
second largest crop on record.

World consumption is projected to climb to a record 23.7 million tons
in 2005/06, up half a million tons (2%). China (Mainland) remains the
driving force behind world cotton mill use. Cotton consumption in China
(Mainland) is expected to reach 8.6 million tons in 2005/06, up 5% from
this season, exceeding anticipated production by 2.8 million tons. Mill
use in the rest of the world is expected to reach 15.1 million tons,
expected increases in India and Pakistan offsetting declines in other
countries, mostly developed.

China (Mainland) is the main beneficiary of the abolition of quotas on
textile and apparel trade among WTO members since January 1, 2005.
Safeguard petitions to limit the growth of imports from China
(Mainland) to developed countries are multiplying in numerous textile
categories, as allowed until 2008 under WTO rules. An appreciation of
the yuan, if it occurs, would benefit China's competitors on the export
markets, without stemming the flows into import markets.

Record imports by China (Mainland), combined with lower production and
rising consumption in the rest of the world, will lead to 2005/06 world
exports of an estimated 8.1 million tons, up 900,000 tons from this
season. The Cotlook A Index is expected to average 68 cents per pound
in 2005/06. The projected 15-cent jump from the average anticipated for
the current season is essentially the result of projected skyrocketing
net imports by China (Mainland). The structural imbalance between
domestic production and consumption in China (Mainland) is expected to
continue supporting cotton prices during the next seasons.

* US cents per pound. The estimate for 2004/05 IS NOT A PRICE MODEL
RESULT. The statistical estimate for 2005/06 is based on current
estimates of supply and use; 95% confidence intervals extend 12 cents
per pound above and below the estimate.

(Press releases are available via e-mail. For further information, please contact us at

The International Cotton Advisory Committee is an association of 41 governments of cotton producing and consuming countries.

The Secretariat of the Committee publishes information related to world
cotton production, supply, demand and prices, and provides technical
information on cotton production technology. Detailed statistics are
found bimonthly in COTTON: Review of the World Situation, $160 per
year. A monthly outlook by fax is also available for $300 per year or
on the Internet for $250 per year. Access to the weekly estimates of
world cotton supply and use by the Secretariat is also available on the
Internet for $500 per year.

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