The Hindu Business Line : Cotton acreage seen rising

ENCOURAGED by high international cotton prices, world acreage and production of the fibre crop is expected to expand rapidly in 2004-05; and for the same reason world consumption during the year will remain flat, leading to a stock build up. These developments will obviously have an impact on cotton prices.

Currently, cotton prices are ruling at a level not seen since early 1997.

According to Washington-based International Cotton Advisory Committee (ICAC), world cotton output in 2004-05 is projected to reach a record 22 million tons, up 9 per cent from 20.1 ml.t. of the current year. Consumption, on the other hand, is projected at 20.9 ml.t. (unchanged from current year) because of high cotton prices and cheaper polyester fibre. China will continue to drive world mill consumption while mill use in develop countries would decline.

With consumption projected to trail production by about one ml.t., world stock levels are likely to increase correspondingly to 8.9 ml.t.

"These market fundamentals suggest that the Cotlook A-Index will average 59 cents per pound in 2004-05, 12 cents below the projected average of 71 cents for the current year," ICAC said in its latest report.