The Cotlook A Index moved in the range from 50 US cents per pound to 79 US cents. After hitting rock bottom in March, cotton prices steadily increased to reach a temporary high at the end of the year. Market fundamentals have been pushing up prices to higher levels as the world cotton production has been downwardly revised every single month from 24.3 million tonnes in December 2008 to 22.4 million tonnes in December 2009. This 7.9% shortfall of supply may result in significantly lower inventory as cotton consumption expectations were lifted from the middle of the year onwards. Furthermore, much lower Chinese cotton crop this season and a rebound in textile production will compel PR China to buy more foreign cotton. Cotlook A Index Far East, 2004 - 2009 95
US$ cent per pound
90 85 80 75 70 65 60 55 50 45
2004
2005
2006
2007
2008
2009
World cotton area for 2009/10 continues declining at 30.4 million hectares, marking the fifth consecutive seasonal decline. Almost 80% of the global cotton area is located in six countries - India (10.3 million hectares), PR China (5.3 million hectares), United States (3.1 million hectares), Pakistan (3.0 million hectares), Uzbekistan (1.3 million hectares) and Brazil (0.8 million hectares). World Cotton Growing Farmland 40
million hectares
35 30 25 20 15 10 5 0 '80
'90
India
China
Pakistan
ROW
'00 USA
It has been quite normal in the past to experience changes in the world cotton growing area. However, the future looks rather gloomy as several leading growers have reduced cotton growing farmland. Nevertheless, there are also encouraging developments of expanding cotton area like in Argentina (+47%), Australia (+19%) and Mozambique (+16%). In general, as cotton would not be grown other than for use by the textile and clothing industry, the ongoing decline in cotton cultivation area is a direct response to softening textile demand and higher returns from other crops. The Fiber Year 2009 / 10
013