Cotton prices fall for first time in 2011
Cotton prices fell in April for the first time in seven months, according to the latest figures from the US-based International Cotton Advisory Committee (ICAC), thanks to a slowdown in demand and a switch to man-made fibres.
Cotton prices as measured by the Cotlook A Index reached a record of $2.44/lb on 8 March, but were down to $1.73/lb on 28 April, the ICAC said. But the group also pointed out that prices continue to remain very high by historical standards.
The main reason explaining the recent drop of cotton prices seems to be a significant slowing in demand, it noted. Very high cotton prices, problems of credit access, and the fact that cotton yarn prices did not increase as fast as cotton prices, 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 fibres are curtailing demand for cotton and are reducing its share of world fibre use.
Production, meanwhile, 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 fibres 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.
