WORLD: Cotton seen losing market share to polyester
Cotton is expected to continue to lose market share this season after the latest indices suggest prices will be "substantially" higher than polyester in China for the fifth time in a row.
According to the International Cotton Advisory Committee (ICAC), the Cotlook A Index averaged 93 cents per pound in August, while polyester in China averaged 76 cents per pound.
"This is a substantial difference in a high-volume, low-margin business like yarn spinning," the inter-governmental group said.
Despite the loss of market share, world cotton consumption is rising in absolute terms and is estimated at 23.7m tons in 2013/14, according to the latest forecast.
It says falling mill use of cotton in China due to its cotton procurement policy - which is keeping cotton prices at levels above manmade fibres - is encouraging a significant shift in mill use to other countries.
World cotton production, which is expected to come in at 25.6m tons in 2013/14, would be down 3.5% from last season.
The US will likely account for most of the decline in world production, with US production falling 900,000 tons, or 25%. Production in China and Uzbekistan are projected to remain unchanged in 2013/14.
World trade in cotton is forecast to decline by 1m tons to less than 9m, with this decline almost entirely accounted for by reduced imports into China.
Shipments from all major exporters are expected to fall, except from the CFA or franc zone in Africa where producers are increasing production in 2013/14, and thus exports, in response to higher cotton prices.
The forecast for the season average Cotlook A Index in 2013/14 ranges from 85 to 126 cents per pound, with a midpoint of 103 cents per pound. While world ending stocks are forecast to climb to 19m tons by July 2014.
Estimates of mill use in India and Pakistan during 2011/12, 2012/13, and 2013/14 have been lowered, resulting in higher estimates of world ending stocks and a reduction in the forecast of the Cotlook A Index.
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