The International Cotton Advisory Committee (ICAC) has raised its cotton consumption outlook

The International Cotton Advisory Committee (ICAC) has raised its cotton consumption outlook

Global consumption of cotton is expected to increase for the end of the 2014/15 crop year as its price converges with that of polyester.

The International Cotton Advisory Committee (ICAC) raised its outlook at the weekend, forecasting a 5% increase in consumption to 24.5m tonnes.

Consumption in Asia is expected to grow "strongly" for the year, led by a 5% increase in China to 7.9m tonnes. India's consumption is expected to grow by 6% to 5.4m tonnes, while the rest of Asia is projected to expand by 8% to nearly 2.4m tonnes.

The ICAC revealed that after international cotton prices spiked in 2010-11, many spinners decreased the share of cotton in yarn for greater use of polyester. At the start of 2013, the gap between cotton and polyester prices widened.

At the start of 2013, the gap between cotton and polyester prices widened. However, the situation changed significantly in July, with the Cotlook A-Index falling to 80 cts/lb while polyester climbed back up to around 73 cts/lb. Furthermore, the price of cotton in China has fallen from around 141 cts/lb during most of 2013/14 to around 126 cts/lb in the last few weeks, it said.

ICAC has forecast that world trade will drop to 25.5m tonnes from 26.1m last year, primarily due to an overhaul in a government stockpiling programme in China, the world's top consumer and producer.

India's production is expected to be just over 6m tonnes, and China's at around 6.2m tonnes. Abundant rain in the US, means production here is projected to grow to nearly 3.5m tonnes.

Trade is forecast to decline by to 7.9m tonnes, driven mainly by a 26% fall in imports by China to 2.2m tonnes. India's exports are likely to fall to 800,000 tons, which would be less than half of its exports in 2013/14. Exports from the US are forecast to rise by 9% to 2.5m tonnes.