COTTON USA Conference in Istanbul Covers “Sourcing In A Volatile World”

Cotton Council International (CCI) and Cotton Incorporated hosted suppliers of U.S. cotton, the Turkish textile industry, and their downstream customers in the brand and retail sectors at a one-day conference titled "Sourcing In A Volatile World" in Istanbul.

The conference provided opportunities for buyers and sellers of U.S. cotton to discuss the current market situation and how fast-changing raw material prices are pushing the entire textile and garment industry to look for new ways of doing business with their customers.

The conference brought together over 100 senior executives to hear the latest reports on U.S. and world cotton production for the current season, as harvesting is well completed in the Northern Hemisphere.

In today's volatile global economic environment, suppliers and buyers of U.S. cotton discussed the challenges and alternative solutions to sourcing U.S. cotton. Included on the conference agenda was how businesses can build a more efficient cotton supply chain during times of record cotton price movements, limited availability and sourcing challenges.

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Tight cotton supply/demand situation to continue in 2011

National Cotton Council economists say a tight overall cotton supply/demand situation coupled with continued pressure from competing crops for the coming year is consistent with cotton prices above historical norms.

“As 2011 begins, the global cotton market is experiencing unprecedented prices with the “A” Index at $2.00 and nearby futures trading in the $1.70’s,” Council economist, Dr. Gary Adams, said in his outlook for delegates at the NCC’s 73rd Annual Meeting. “Unlike the price spike of March 2008, the current price situation has support from the fundamentals.”

Adams, the NCC’s vice president, Economics and Policy Analysis, said a key issue to watch will be the ability to sustain cotton demand in the prevailing market conditions, particularly given the uncertain nature of the macroeconomic recovery. He said that consumers in developing markets such as China and India will increasingly become the drivers of global retail cotton demand.

“Growth in cotton demand bodes well for total cotton trade,” Adams said. “Increased mill use in China will require additional imports as available cotton stocks remain at low levels. In fact, for most countries, beginning stocks for the 2011 marketing year are at the lowest levels in recent years, and leave little room for further reductions during the upcoming marketing year.”

He said the increased import demand will create a positive environment for U.S. cotton exports, which are forecast at 15.6 million bales for the 2011 marketing year – the second highest level after the 2005 marketing year.

“U.S. stocks that began the marketing year under 3.0 million bales will fall to 2.3 million bales by July 31, 2011,” Adams said. “When compared to the past 50 years, ending stocks for the 2010 marketing year will represent a new low. The United States will be essentially sold out of cotton as any remaining stocks will be committed to a textile mill, either in the U.S. or abroad.”

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