cotton prices predictions 2012

cotton prices predictions 2012 ; The first U.S. Department of Agriculture (USDA) cotton forecast for 2011/12 projects growth in both world cotton production and consumption, with production exceeding consumption for the first time in 7 years. Global production is forecast to rise to a record of about 125 million bales, 10 million above 2010/11.

The nearly 9-percent growth rate for 2011/12 pushes the anticipated crop nearly 12 million bales above the 5- year average.

Cotton production in 2011/12 is forecast to increase in most of the major producing countries, led by India, China, and Pakistan. World cotton consumption for 2011/12 is projected at 119.5 million bales, 3 million higher than 2010/11 and the largest since 2007/08. Read World cotton production forecast 2011 -2012

Morgan Stanley (MS) cut its 2012-2013 cotton price forecast by 15 percent as the bank expects high prices to curb “near-term” demand and farmers to plant more.

Cotton may average 80 cents a pound in the marketing year ending July 2013, compared with 94 cents in an earlier projection, Hussein Allidina, the bank’s New York-based head of research, and Bennett Meier, said in a report dated yesterday. The 2011-2012 forecast was raised by 14 percent to $1 a pound.

These forecasts reflect our expectation that moderate near-term demand deferral and a large supply response this year will pressure prices in 2011, 2012 and beyond,

The global stocks-to-use ratio is likely to improve from the current 17-year-low level, Morgan Stanley said. “This estimate is contingent on yield improvements in China and Pakistan, as well as a further 7 percent increase in global acreage in 2011, compared to an average decline of 0.7 percent over the past 10 years.”

Our 2011/12 price forecasts imply 19 percent of additional downside to the futures curve through the end of the marketing year,” the analysts said.

Weather is “a growing risk” to U.S. production, they said, referring to drought in Texas, the largest cotton- producing state. About 63 percent of Texas cotton is unirrigated, they said and estimate nearly 3.8 million acres of crops stand a “heightened risk of abandonment or sub-trend yields.

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