Higher Cotton Prices Forecast

CHICAGO - Feb 2/06 - SNS -- The Cotlook A Index averaged 56 cents per pound between August 2005 and January 2006, five cents higher than over the same period last season, according to the The International Cotton Advisory Committee (ICAC).

The group said the monthly average Cotlook A Index increased from 56 cents per pound in November and December 2005 to 58 cents per pound in January 2006. However, international cotton prices are still well below the Secretariat's projection of 65 cents per pound for the entire 2005-06 season.

World cotton production is estimated at 25.2 million tons in 2005-06, down 1.2 million tons (4%) from last season, while consumption is projected to increase by about 500,000 tons (2%) to a record 24.4 million tons. With consumption below production, world ending stocks are increasing for the second consecutive season to 11.3 million tons in 2005-06.

"Higher prices in 2005-06 are likely to encourage a modest expansion of world cotton area in 2006-07 and the Secretariat estimates that world area will grow by about 3% to 35.7 million hectares," the ICAC said. "Assuming average weather conditions, it is expected that world production will reach 25.4 million tons in 2006-07, slightly above 2005-06. Production is expected to increase in China (Mainland), India, Turkey and Brazil, but is forecast down in the United States."

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