The International Cotton Advisory Committee (ICAC) has forecast an average Cotlook ?A? Index of 69 US cents per pound for season 2007-08, 10 US cents higher than that in season 2006-07 due to the lower production and yield in China, the United States, Turkey and Pakistan.
The Cotlook ?A? Index represents the offering price in US cents per pound of raw cotton in the international raw cotton market.
The index has risen by nearly 23% since December 2006.
The? A? Index rose above 70 cents in the month of December 2007. The index is calculated from the prices at which cotton is offered to the final consumer i.e. mills.
Increased speculative buying by funds has also contributed to the price rally in the world cotton market which began in June 2007, Kavita Chacko, Economist with NCDEX said.
Cotton planting in the US is forecasted to be 9.185 million acres for 2008, 1.66 million acres less than that sown in 2007.
Indian raw cotton prices also witnessed an upswing in the month of December following the boom in exports, which acts as a price support, from the country.
Exports from the country have reportedly risen significantly this season driven largely by robust demand from markets such as Bangladesh, China, Pakistan, Turkey and South East Asia, she said.
Increasing Chinese import requirements coupled with lower export surplus in the US has benefited India?s cotton exports and has helped to subdue the impact of the rupee appreciation on the textile industry, she added.
Overall lower levels of global cotton output, baring that from India, in the current season and prospects of still lower production in the next year has led to the strengthening of cotton prices, sources said.
According to the ICAC, world production for season 2007-08 is estimated to decline by 3% to 26.0 million tonne due to lower area under cultivation. Also, the world mill consumption for 2007-08 is expected to increase by 3% to 27.4 million tonne over previous season.