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The World Cotton Market: Structure and Outlook

The World Cotton Market: Structure and Outlook. Alejandro Plastina, PhD Economist International Cotton Advisory Committee. Texas International Cotton School 32 nd Session 10 August 2012. Topics. ICAC End-Use Cotton Consumption Market Shares Population, Income, Relative Prices

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The World Cotton Market: Structure and Outlook

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  1. The World Cotton Market: Structure and Outlook Alejandro Plastina, PhD Economist International Cotton Advisory Committee Texas International Cotton School 32nd Session 10 August 2012

  2. Topics • ICAC • End-Use Cotton Consumption • Market Shares • Population, Income, Relative Prices • Market Concentration • Cotton market fundamentals • Supply & demand • Price volatility • Government interventions • Long-term outlook

  3. INTERNATIONAL COTTON ADVISORY COMMITTEE >40 Governments Formed in 1939 $1.8 million 10 employees, 9 countries Washington, DC

  4. ICACMISSION • Assist governments in fostering a healthy world cotton economy, by • Providing transparency • Clearinghouse for technical information on cotton production • Forum for discussion of cotton issues of international significance

  5. ICACFOUR PRIMARY FUNCTIONS Statistics Technical Information Forum for Discussion and Cooperation Liaison with International Community

  6. ICAC SOURCES • Coordinating Agencies • National Organizations • World Bank, FAO, UN • Trade Publications • Government Reports • Business Contacts • Researchers

  7. ICAC Publications www.icac.org

  8. ICAC Publications • Weekly: • Cotton this week! • Monthly: • Cotton this month • Bi-monthly: • Cotton: Review of the World Situation • Extra-Fine Cotton Update

  9. ICAC Publications • Quarterly: • The Recorder • Annually: • Cotton: World Statistics • The Outlook for Cotton Supply • World Cotton Trade • World Textile Demand • Production and Trade Policies Affecting the Cotton Industry

  10. ICAC Publications • Every 3 years: • The FAO/ICAC World Apparel Fiber Consumption Survey • The World Cotton Market: Projections to 2025 • The Structure of World Cotton Trade • Cost of Production of Raw Cotton • Cotton Production Practices • Current Research Projects in Cotton

  11. www.icac.org

  12. ICAC Free Reports

  13. Cotton vs. Man-Made fibers

  14. World Consumption of Textile Fibers

  15. World Consumption of Textile Fibers

  16. Market Share of Cotton in World Textile Fibers Consumption Percentage Average 1960-2008

  17. World Consumption of Textile Fibers and Population

  18. Increase in Consumption (thousand tons) COTTON SYNTHETIC FIBERS

  19. Relative Price of Cotton to Polyester Ratio

  20. Cotton Consumption per Capita vs. GDP per Capita

  21. Market Share of Cotton vs. GDP per Capita

  22. Market Share of Cotton vs. GDP per Capita

  23. GDP, Population and Cotton About 100 countries: • GDP < 10,000 international dollars in 2012 • Population: 4.9 billion people (54% world) • Top 5 by population: • China (2013 gdp/cap +9.9%) • India (2013 gdp/cap +7.5%) • Indonesia (2013 gdp/cap +6.7%) • Pakistan (2013 gdp/cap +3.0%) • Bangladesh (2013 gdp/cap +6.5%)

  24. End-Use Textile Fiber Consumption by Region 2000: 50 million tons 2012: 75 million tons

  25. End-Use CottonConsumption by Region 2000: 20 million tons 2012: 24 million tons

  26. Cotton Consumption ↑ population, ↑ cotton consumption ↑ income, ↑ cotton consumption

  27. Cotton Consumption Low income countries: ↑ income, ↓ market share of cotton High income countries: ↑ income, market share of cotton stable at around 40% Outlook: ↑ cotton consumption ↓ market share of cotton

  28. Cotton market fundamentals Supply & demand Price volatility Government interventions

  29. World Supply = Beginning Stocks + ProductionWorldDemand =Mill Use + Ending StocksWorld Supply = World Demand

  30. World 2011/12(million metric tons) Beginning Stocks = 9.3 Production = 27.0 Supply = 36.3 Mill Use = 22.7 Ending Stocks = 13.6 Demand = 36.3

  31. Supply = Demandhigher/lower production=higher/lower Ending Stocks

  32. Supply = Demandhigher/lower mill use=lower/higher Ending Stocks

  33. Country Supply = Beginning Stocks + Production + ImportsCountry Demand =Mill Use + Ending Stocks + ExportsCountry Supply = Country Demand

  34. India 2011/12 (million metric tons) Beginning Stocks = 1.6 Production = 5.9 Imports = 0.1 Supply = 7.6 Mill Use = 4.4 Exports = 2.0 Ending Stocks = 1.2 Demand = 7.6

  35. Important Concepts • World Ending Stocks = Beginning Stocks + Production – Mill Use • World Stocks to Use Ratio = Ending Stocks / Mill Use World Ending Stocks 2011/12 = 13.6 World Stocks to Use Ratio 2010/11 = 13.6 / 22.7 = 0.60

  36. Important Concepts • Country Ending Stocks = Beg. Stocks + Prod. + Imports – Exports – Mill Use • Country Stocks to Mill Use Ratio = Ending Stocks / Mill Use • Country Stocks to Use Ratio = Ending Stocks / ( Mill Use + Exports ) INDIA: Ending Stocks 2011/12 = 1.2 Stocks to Mill Use Ratio 11/12 = 1.2 / 4.4 = 0.27 Stocks to Use Ratio 11/12= 1.2 / (4.4 + 2.0 )= 0.19

  37. Season-Average A Index(source: Cotlook Ltd.) US cents / lb

  38. A Index and Stock-to-Mill Use Ratio % change in Cotlook A Index % change in SMU in World-less-China From 1981/82 to 2009/10

  39. Cotlook A Index US cents / lb 2007/08

  40. World Beginning Stocks Million tons

  41. World Production Million tons Southern Hemisphere Northern Hemisphere

  42. World Supply = Beg. Stocks + Production Million tons Prod. S. Hem. Prod. N. Hem. Stocks

  43. Factors Affecting Cotton Prices in 2010/11 A Index, US cents/lb

  44. Factors Affecting Cotton Prices in 2010/11 A Index, US cents/lb

  45. Factors Affecting Cotton Prices in 2010/11 A Index, US cents/lb

  46. Price Volatility by Season: Cotlook A Index Difference with respect to season average Season highest value Season lowest value

  47. World Production and Mill Use Million tons Production Mill Use

  48. World Ending Stocks Million tons

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