International cotton prices fall

by Zarina Ergasheva

The international cotton prices have sharply fallen. According to some media outlets, the price of one ton of cotton fell from US$5,200 in March to US$3,900 in late April.

Specialists from the Ministry of Energy and Industries (MoEI) consider that the international cotton prices fell as considerable cotton stocks were made following flurry in the cotton market. “International exerts expect this price to keep till the new cotton harvest,” said the source, “Many countries have increased areas under cotton and experts forecast cotton harvest will increase this.”

International media outlets reported in early May that according to International Cotton Advisory Committee (ICAC), after seven consecutive months of increase, cotton prices fell in April 2011 due to significant slowing in demand. The Cotlook A Index reached a record of $2.44 on March 8, 2011, but was down to $1.73 per pound on April 28. These prices remain very high by historical standards.

ICAC pointed out that very high cotton prices, problems of credit access, and the fact that cotton yarn prices did not increase as fast as cotton prices and started yielding ground in mid-March 2011, are all affecting mill use. Global cotton use is expected to reach 25.1 million tons in 2010/11, almost unchanged from 2009/10. A slowing of spinning operations and an increased switch to chemical fibers are curtailing demand for cotton and are reducing its share of world fiber use.

Production is expected to increase by 11% to a record of 27.6 million tons in 2011/12. Increased cotton supplies will feed demand in 2011/12, but high prices and competition from chemical fibers are expected to limit growth in mill use to 3%. World cotton production is projected to exceed mill use in 2011/12, which would result in ending stocks recovering to 10.1 million tons. The world ending stocks-to-use ratio, forecast to reach an all-time low of 33% this season, could rebound to 39% in 2011/12. This would remain lower than the 10-year average of 49% prevailing before 2009/10.

Daily News & Analysis (DNA) reported on May 9 that cotton prices, which were on an upsurge, have fallen 20% in the last one month, easing margin pressures on Indian textile companies and raising prospects of price cuts for end-consumers. Textile firms now expect to sustained margins, if not improved profitability. The decline in prices in India, the world’s second-largest cotton producer after China, is primarily on account of improved production and a supply-glut in the overseas markets. Significantly, this price decline has reduced cotton yarn prices benefiting companies using yarn to make garments.

We will recall that Tajikistan has allocated 210,000 hectares to cotton cultivation this year, but farmers have managed to plant cotton only on 203,100 hectares. Specialists from the Ministry of Agriculture (MoA) say farmers plan to yield some 400,000 tons of raw cotton this year.

In 2010, farmers planted cotton on 160,400 hectares and yielded some 330,000 tons of raw cotton.

See the original article >>