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MUMBAI, April 8

THE anticipation of reduced plantings in the northern hemisphere and news of a stronger-than-expected rebound of the US economy imply higher cotton prices ahead and the Cotlook-A Index is projected to average 44 cents per pound in 2001-02, according to International Cotton Advisory Committee (ICAC).

World production is currently forecast to decline by some 1.7 million tonnes (mt) (8 per cent) to 19.4 mt in 2002-03 while cotton mill use is projected up four lakh tonnes (2 per cent) from 19.9 mt, surpassing the 20 mt mark for the first time.

As a result, 2002-03 ending stocks are now projected to decline by some nine lakh tonnes. Supply and demand estimates suggest that the Cotlook-A Index will average 51 cents per pound next season, ICAC said.

The increase in cotton prices projected for 2002-03 is the result of an improvement in the supply/demand situation in the world outside China and of rising imports of cotton by China.

Meanwhile, in the northern hemisphere which accounts for about 90 per cent of world production, 2002-03 cotton plantings are starting with international prices at their lowest level, at this period of the year, in 29 years. Pressured downward by over-supply, the Cotlook-A Index has been hovering around 42 cents per pound since mid-December.

Despite a 4-lakh tonne decline in southern hemisphere, world production is estimated at a record 21.1 mt in 2001-02, 1.3 mt more than consumption. The gap between output and mill use is mirrored by an increase in world ending stocks, estimated to climb to 10.6 mt by end of July 2002, the highest since 1985-86.

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