Cotton Prices Expected to Decline Next Year

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Cotton prices are expected to decline in 2011/12 marketing season effective August 1st, 2011. According to United States of Department Agriculture Economic Research Service, price decline is attributed to tempered growth in global cotton consumption.

Cotton prices are forecast to fall but are expected to 70% higher than the prices two years back, according to May 12th report from USDA.

Global cotton consumption is expected to rise only by 2.6% from the previous year although this higher than the long term annual growth of 1.9%. Global use is expected to be 119.5 million bales (480 lbs each).

India's consumption in 2011/12 is forecast at 21.5 million bales of 480 lbs each which is 2.4% higher than the previous year. India's share in the global consumption will be 18%. Pakistan's consumption is expected to rise by 5% and is pegged at 10.75 million bales, which is 9% of global consumption.

Although the global economy is recovering, cotton consumption is tempered by its higher prices and relative price with competing synthetics, according to the USDA report.

Seshadri Ramkumar, Texas Tech University, USA

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