Cotton was traded between $1.44 and $1.48 per pound at the New York Futures on Friday, down from its previous rates at $1.52 and $1.54 per pound last week.
The prices hit a historic high in March -- $2.04 per pound on March 25 and $2.19 on March 7 this year.
But the market calmed down at end-March and early-April with a forecast of better output next year as cotton producing countries such as US, China, India, Pakistan and the Commonwealth of Independent States increased acreage for cotton cultivation this year.
The initial world cotton projections for 2011-12 show a sharp increase in production to a record 124.7 million bales, with India, China, and Pakistan accounting for 70 percent of the total output, said a report by the United States Department of Agriculture.
World trade is projected at 40 million bales, mainly reflecting higher import demand by China, the report said, adding that world ending stocks are projected to rise to nearly 48 million bales, a 13-percent increase from the beginning level.
"World consumption of cotton is reduced, due mainly to reductions for India and Pakistan," the report said. China's imports are lowered 1.5 million bales due to a recent fall-off in demand, which is partially offset by increased imports for Pakistan and Turkey. World ending stocks are raised nearly one million bales, the report added.
The cotton cultivation area is projected to rise by 7 percent in 2011-12 to 36 million hectares globally, the largest in 17 years, in response to record prices in 2010-11, said a report of the International Cotton Advisory Committee (ICAC).
Farmers are expected to expand cotton area in 2011-12 in all producing countries, the ICAC report said, adding that world cotton production is projected to increase by 9 percent to a record exceeding 27 million tones.
Cotton traders in Bangladesh said they reduced the import for higher prices of the item worldwide.
The higher prices of cotton have also trimmed the demand for yarn and fabrics as garment manufacturers say they can hardly make profit although the international buyers have raised the prices for apparel items to offset the rising prices of raw materials.
The cotton prices started to come down because of a decline in sales of clothing items and slow orders by international buyers, said an official of a textile firm.
"Buyers are now in a wait and see mood as the cotton prices started to ease," the official of Paramount Textile Ltd said, asking not to be named.
He said the scheduled order of April is yet to be placed due to the decline in the prices of cotton.
Sales of yarn and finished woven fabrics also marked a fall due to a cut in demand from the garment manufacturers, said Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA).
He attributed low sales of yarn and woven fabrics mainly to a rise in import of fabrics from China and sales of yarn by India at a dumping price in Bangladesh.
From January this year, garment manufacturers have been getting duty facility for EU markets even for imported fabrics. As a result, they feel encouraged to import the fabrics.
Alamin said another cause for stockpiling of yarn and fabrics is that the traders imported cotton at higher prices earlier, but they cannot sell those at lower prices now.
The import of fabrics increased by 88 percent in January-March period this year compared with the same period last year, he added. "The spinning sub-sector is now in a dire strait," he said.
News Source: The Daily Star, Wed, 18/05/2011
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