With production outpacing consumption, world ending stocks rose to an estimated 10.5 million tonne by July 31, 2005, up from 8.1 million tonne in 2003-04 and the highest since 2001-02.
According to the International Cotton Advisory Committee (ICAC), an association of 41 governments of cotton producing and consuming countries, world production soared by 2.5 million tonne (27%) in 2004-05 to an unprecedented 26.2 million tonne, while consumption reached a record of 23.4 million tonne, up 2.1 million tonne (10%).
The rate of growth in consumption is expected to decelerate to 2%. Nevertheless, world consumption is projected to reach a record of 23.9 millions tonne, up over half a million tonne from 2004-05. The textile industry in China (mainland) will continue to serve as the locomotive for world mill use.
Imports by China (mainland) fell to an estimated 1.35 million tonne, down 580,000 tonne (30%) from the record in 2003-04. As a result, the Cotlook A Index averaged 52 cents per pound in 2004-05, 16 cents (24%) below the average during the previous season.
Despite lower prices, structural factors continue to support cotton production.
With advances in technology, including biotechnology, yields are rising and production costs are reducing. Government measures protecting cotton producers and exporters remain in place in several countries.
As a result, world cotton area is declining by 2% to an estimated 35 million hectares in 2005-06. World cotton production is forecast to decline by 2.1 million tonne (8%) to 24.1 million tonne in 2005/06, still the second largest crop on record.
China (mainland) is expected to import a record 2.8 million tonne, more than twice the volume it imported in 2004-05.
The 2% revaluation of the yuan in July 2005 is expected to have a marginal impact on Chinas (mainland) textiles and apparel exports, benefiting its competitors without stemming flows into import markets.
Record imports by China (mainland) combined with lower production and rising consumption in the rest of the world will boost world trade.
World cotton exports are projected to cross 8 million tonne for the first time in 2005-06, up 500,000 tonne.