The US Department of Agriculture predicts that global cotton use will increase by 3% in the 2011-12 fiscal year.
The US Department of Agriculture stated in its latest report that the cotton consumption in 2011-12 is expected to increase by 4-5%, which will be lower than the world economic growth rate for the second consecutive year.
Traditionally, these figures have grown at the same rate, reflecting the amount of cotton used in clothing. Like other agricultural products, clothing is mainly an option, unlike food.
In fact, during the five years before the world economic recession, the world economy grew by approximately 4.6% annually, while cotton consumption increased by 4.7%.
However, this relationship will be broken next year, and textile mills will re-establish inventory, as this year's cotton supply is reduced, textile mills are depleted, cotton prices hit new highs earlier this month, apparel demand has slowed down, and retailers have been affected.
High cotton prices will continue to cause demand to shift to polyester, which was about twice as cheap as cotton prices five years ago.
The lagging consumption of cotton, coupled with the prospect of cotton prices predicting a strong rebound in cotton production, the world cotton stocks will increase by 17.5% to 50.3 million bales.
At this level, cotton stocks represent 42% of consumption, much higher than the 32% this year. However, compared with the recent average level, it is still at a relatively low level.
The inventory-to-use ratio, which is widely used to measure the availability of a crop and therefore has pricing potential, predicts a drop in prices, with the Cotton Outlook 2010-11 looking an average of 175 cents/lb for the Cotlook A Index and 135 cents/lb for the next year.
On Friday, the A-index ran at 209.30 cents/lb, down 6.45 cents on the day, lower than the record high reached earlier this month.
Analysts from Rabobank said that cotton prices may not return to their highest point. If farmers see prices falling, they will sell cotton, and they would have put cotton in their hands, hoping to sell at the highest price.
Dutch Bank said that the drop in prices actually encourages growers to sell because they fear that prices will continue to be weak.
"A large number of sell-offs, plus plantings in the northern hemisphere, may be good, which means that if production is not a problem, cotton prices may have a hard time reproducing the recent highs."
The US Department of Agriculture stated in its latest report that the cotton consumption in 2011-12 is expected to increase by 4-5%, which will be lower than the world economic growth rate for the second consecutive year.
Traditionally, these figures have grown at the same rate, reflecting the amount of cotton used in clothing. Like other agricultural products, clothing is mainly an option, unlike food.
In fact, during the five years before the world economic recession, the world economy grew by approximately 4.6% annually, while cotton consumption increased by 4.7%.
However, this relationship will be broken next year, and textile mills will re-establish inventory, as this year's cotton supply is reduced, textile mills are depleted, cotton prices hit new highs earlier this month, apparel demand has slowed down, and retailers have been affected.
High cotton prices will continue to cause demand to shift to polyester, which was about twice as cheap as cotton prices five years ago.
The lagging consumption of cotton, coupled with the prospect of cotton prices predicting a strong rebound in cotton production, the world cotton stocks will increase by 17.5% to 50.3 million bales.
At this level, cotton stocks represent 42% of consumption, much higher than the 32% this year. However, compared with the recent average level, it is still at a relatively low level.
The inventory-to-use ratio, which is widely used to measure the availability of a crop and therefore has pricing potential, predicts a drop in prices, with the Cotton Outlook 2010-11 looking an average of 175 cents/lb for the Cotlook A Index and 135 cents/lb for the next year.
On Friday, the A-index ran at 209.30 cents/lb, down 6.45 cents on the day, lower than the record high reached earlier this month.
Analysts from Rabobank said that cotton prices may not return to their highest point. If farmers see prices falling, they will sell cotton, and they would have put cotton in their hands, hoping to sell at the highest price.
Dutch Bank said that the drop in prices actually encourages growers to sell because they fear that prices will continue to be weak.
"A large number of sell-offs, plus plantings in the northern hemisphere, may be good, which means that if production is not a problem, cotton prices may have a hard time reproducing the recent highs."
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