Cotton Council International has announced that the Cotlook A Index is down by 39% from its record of the previous season. The considerable increase in global cotton stocks combined with declining mill use triggered a significant decline in international cotton prices.

Exceptionally high cotton imports by China (5.2 million tons) were the main factor preventing a more pronounced fall in international prices. Most of the gain in global cotton stocks during the last business year took place in China. The ICA reports that Chinas stocks almost tripled to 6 million tons while in the rest of the world they increased by only 5% to 7.6 million tons. Following the plunge in cotton prices in 2011/12, world Cotton production is forecast by ICAC down by 9% to 24.7 million tons in 2012/13. Global cotton mill use is projected to increase only slightly to 23.2 million tons.

In 2012/13, the resulting excess supply of 1.6 million tons will cause global stocks to rise by 11% to 15.2 million tons. For 2012/13 is expected that the size of the Chinese national cotton reserve may continue to increase. Assuming much lower imports by China in 2012/13 (2.6 million tons), global cotton trade is expected to fall by 20% to 7.5 million tons in 2012/13. However, imports by countries other than China could grow,driven by lower cotton prices and a slightly higher level of consumption. In this period the projected accumulation of cotton stocks will weigh on international cotton prices.