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Economy in Brief

Price Of Cotton Soars
by Louise Curley   September 21 2010

The cash price for a pound of cotton was 95.22 cents last Friday, up 19% since the end of July. By Monday of this week, the futures price was over one dollar up almost 25%. The first two charts show the daily futures and cash prices of cotton over the last two years. The rapid run up in cotton prices is due to lower production, largely the result of floods, particularly in Pakistan, but also in China. World consumption continues to increase, as a result stocks are at their lowest level since 1998.

The Haver Data Base, USDA, World Agriculture Statistics, contains a wealth of background information that helps to put the present cotton situation in perspective. Among the data provided are annual production, imports, exports, consumption, beginning and ending stocks, yields, the ratio of stocks to use and the area harvested. Data are provided for practically all agricultural product in practically every country of the world and world totals.

The four largest producers of cotton are China, India, the United States and Pakistan. In the 2010 crop year, China produced 32,500 (1000, 480lb bales), India, 26,000, the U. S., 18,841, and Pakistan, 9,300. as can be seen in the third chart. The four accounted for 74% of world production in that year. China and Pakistan consume most of their production and export very little. India has begun to export some of its production and in 2010 exports amounted to 19% of production. The U. S. is a major exporter and in 2010, exports rose to 82% of production. Production increased significantly in 2010 in India and the U. S.; it was relatively steady in China, and fell in Pakistan. As a result of the reduced production, and in the case of the U. S., increased exports, year end stocks in China, Pakistan and the U. S. are at their lowest levels in the past ten years, as can be seen in the fourth chart. World stocks are 38% below the recent peak reached in 2006.

Cotton Production(1000 480lb bales) 2010 2009 2008 2007 2006 2005 2004 2003
China 32500 32000 36700 37000 35500 28400 30300 23800
India 26000 23200 22600 24000 21800 19050 19000 14000
US 18841 12188 12845 19207 21588 23890 23520 18255
Pakistan 9300 9600 8700 8600 9600 9850 11138 7845
World 116952 101149 107136 119675 121741 116478 121569 96734
Year End Stocks (1000 480lb bales)
China 16006 18781 22366 20504 20536 32531 18388 18983
India 7669 6669 8919 5629 7129 7839 8764 4186
US 2700 3000 6337 10051 9479 6069 5495 3450
Pakistan 2473 2698 3473 4473 4260 4597 4945 3134
World 45435 46976 60439 60613 62108 61841 60575 48084
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