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    Chapter 1 - The world cotton market - Overview 


    World trade in cotton rose from 2.6 million tons in 1950/51 to 4 million tons in the early 1970s and reached 5.8 million tons in 1986/87. Cotton exports averaged 5.9 million tons during the 1990s and climbed to a record of 9.7 million tons in 2005/06 (see figure 1.14). Among the top seven cotton-producing countries, only Uzbekistan does not rank among the top seven consuming countries. Trade accounted for 40% of world cotton production in 2005/06, and the value of world exports was approximately $12 billion.


    Source: ICAC

    World trade in cotton is projected at 8 million tons in 2006/07 (see figures 1.14 and 1.15). Production is falling behind mill use in China, Pakistan and Turkey. These three countries accounted for 15% of world imports in 2000/01 and for an estimated 40% in 2006/07, while imports by the rest of the world declined.


    Source: ICAC

    The largest and most significant impetus to the growth of world trade in cotton is provided by a sharp increase of cotton use in China. A record surge of cotton imports by China to 4.2 million tons, or 44% of world imports, in 2005/06, led world trade to a record. With the reduction of stocks in China to minimum levels, the Government began to provide full support to imports by issuing sufficient import quotas as a measure to balance supply and use, reduce domestic prices, and make the textile industry more competitive.

    For the fifth season in a row Turkey is the second-largest importer of cotton, accounting for 700,000 tons or 8% of world imports in 2006/07. Between 1998/99 and 2004/05, mill use in Turkey rose by 450,000 tons and reached 1.55 million tons. However, Turkey also faces competition in textile exports from Asian suppliers, and mill use in 2006/07 is estimated at the same level of 1.55 million tons. Because cotton production in Turkey remains behind increasing use, imports remain a significant source of supply.

    India became one of the leading importers of cotton starting in 1999/2000 because of reduced production due to reduced planted area and drought. During the same period, Indian mill consumption was stable at around 2.9 million tons, supported by strong exports of cotton yarn and textile exports to Asian markets, the United States, Canada and Mexico. In 2001/02, India imported 520,000 tons of cotton, accounting for 8% of world imports. Indian area and yields rose during 2004/05, resulting in a crop of 3.9 million tons; as a result of increased domestic supply, imports by India declined to 150,000 tons. By 2005/06, production in India had begun to exceed mill use and instead of importing cotton, India exported 700,000 tons, the third-highest total in the world. Indian exports in 2006/07 are estimated at 960,000 tons.

    Cotton consumption in Pakistan continues to expand rapidly in response to export-driven demand. Between 1998/99 and 2006/07, mill use in Pakistan rose by 6% a year to an estimated 2.6 million tons.

    Source: ICAC

    World cotton imports are projected to reach 9 million tons in 2007/08, the second highest level of imports since the record of 9.7 million tons was reached in 2005/06 (see figures 1.16 and 1.17). Increased production in importing countries led to a decline in world imports to 8.2 million tons in 2006/07. China (Mainland) contributed the most to the increased supply and reduced world imports in 2006/07 as a result of a record domestic supply. China (Mainland), Turkey, Bangladesh, Indonesia, Pakistan and Thailand became the largest cotton importers during the past decade. Cotton 12 Chapter 1 – The world cotton market Source: ICAC. Source: ICAC. production in these countries was not able to meet growing mill use. Substantial changes in cotton trade flows occurred during the past decade. Industrial countries (North America, Western Europe, Australia and Japan) accounted for 28% of world imports and 36% of world exports in 1998/99. The decline in mill use in industrial countries, and the rapid expansion in Asia, led to a major shift in the destination of world imports. In 2006/07, industrial countries accounted for 8% of world cotton imports and 45% of world exports. The share of industrial countries in world trade is projected to change to 7% and 46%, respectively during 2007/08. Asia became the primary destination of cotton shipments during the past decade. In 1998/99, Asia accounted for 65% of world mill use, 50% of world imports and 10% of world exports. In 2006/07, Asia accounted for 81% of world mill use, 76% of world imports and 15% of world exports. It is projected that in 2007/08, Asia will account for 82% of mill use, 79% of world imports and 16% of exports.



    Source: ICAC

    The largest share of increased world import demand is being met by exports from the United States. Large supplies of cotton in the United States and declining mill use led to record United States exports of 3.8 million tons in 2005/06. United States exports are estimated at 2.95 million tons in 2006/07 because of smaller production in the United States and reduced imports by China.

    The next largest exporters are India, Uzbekistan, Australia, West Africa and Brazil. Exports from Uzbekistan were mostly declining, from 1.3 million tons in 1992/93 to 660,000 tons in 2003/04. The reason for the steady decline in exports was a decline in production and increased mill use. In 2004/05 and 2005/06, production in Uzbekistan rebounded and exports increased to 1 million tons, accounting for 10% of world exports. Cotton area in Uzbekistan is projected to remain stable during the next several seasons. At the same time, Uzbekistan is expected to continue expansion of spinning capacity, increasing utilization of cotton domestically and reducing the availability of supplies for exports.

    Between 1991/92 and 2002/03, Brazil was a net importer of cotton. During the past several seasons cotton production has begun to rise rapidly because of new, high-yielding commercial production in central Brazil, including the state of Mato Grosso. In 2003/04, cotton production in Brazil exceeded consumption by almost half a million tons, and exports by Brazil rose to 430,000 tons in 2005/06.

    Exports from the CFA zone (francophone Africa) reached a record of more than 1 million tons in 2003/04 and exports were above 1 million tons again in 2005/06. The region is experiencing a reorganization of its cotton sector as several countries adopt policies encouraged by the World Bank and donor countries to encourage privatization. Production in francophone Africa may decline in coming years. Lower market prices for cotton, caused partly by subsidies paid in developing countries and partly by a weakening of the United States dollar against the CFA, are a particular source of dissatisfaction among African producers.

    Australian production has suffered from severe drought during the past several seasons, leading to a sharp decline in exports. In 2004/05 Australian exports fell to 435,000 tons, compared with 850,000 tons in 2000/01. Exports from Australia are projected at 500,000 tons during 2006/07 as stocks are being drawn lower. Australia accounted for only 7% of world exports in 2004/05, compared with 14% during 2000/01.