Cotton heads for 6-season high

The average Cotlook A Index is expected to be 71 cents per pound in 2003-04, the highest in six seasons.

The rise in cotton prices is leading to increased world production in 2004-05. World production is forecast to surpass 22 million tons for the first time, up 1.6 million tons (8 per cent) from this season.

According to the International Cotton Advisory Committee, an association of 42 cotton producing and consuming nations, cotton supply and demand are price responsive despite distortions in the world market caused by government measures.

World consumption is levelling off at 21.1 million tons in 2003-04, outpacing world production by an estimated 700,000 tons. In addition to the tighter world cotton supply, imports by China will rise from 680,000 tons in 2002-03 to an estimated record of 1.85 million tons this season.

Production in China is projected up 1.2 million tons, three-quarters of the total increase, climbing to 6.1 million tons, the highest since 1984-85.

World cotton consumption is projected to rise only 1 per cent to 21.3 million tons in 2004-05.

China's consumption is expected to climb 5 per cent from an estimated 7 million tons this season to 7.35 million tons in 2004-05.

Mill use in the rest of the world is expected down 100,000 tons to 14 million tons, the lowest since 1994-95.

With production expected to exceed mill use in 2004-05, world ending stocks are projected to rise to 8.6 million tons, an increase of 700,000 tons from the current season.

The Cotlook A Index is expected to average 65 cents per pound in 2004-05, down six cents from the average anticipated for the current season.