Consumption will drop to 25.15 million tons in the year through July 31, 2009, down 2.4 percent from a year earlier and 1.9 percent less than forecast last month, Birkenhead, U.K.- based Cotlook said today in an e-mailed report. Rising costs and slowing sales are making yarn prices unprofitable for mills, the researcher said.
"A consensus is forming that off-take in most of the major consuming centers will fall, "Cotlook said in the report. "Even China, the powerhouse that has driven significant expansion in global off-take since the turn of the century, appears to be undergoing a period of retrenchment."
Cotlook lowered the consumption forecast for China by 1.9 percent from a month ago to 10.4 million tons and estimated the Indian subcontinent will use 7.24 million tons, 1.2 percent less than expected in September.
Still, demand for cotton will exceed production, which will decline from a year earlier because of smaller crops in China and in the U.S., the world's largest exporter of the fiber. Global cotton production will reach 24.55 million tons, up 39,000 tons from last month's forecast, Cotlook said. A year earlier, the total was 26.126 million tons.
The production deficit will erode global inventories, though at a slower pace than expected a month ago, according to the report. Stockpiles will fall by 605,000 tons during the marketing year, less than the 1.14 million-ton decline forecast last month, Cotlook said.
Cotton futures for December delivery fell 1.34 cents, or 2.7 percent, to 49.08 cents a pound on ICE Futures U.S. in New York. The price has dropped 28 percent this year.
