Cotton prices will slide in the short-term, with a fall of 37 per cent forecast in 2011–12 (August to July) to average US103 cents a pound. This will reflect a significant increase in world cotton supplies on the back of significantly higher world production in 2010-11.
Forecast record production in 2011–12 and again the expected decline in demand from the major apparel consuming countries of the US and the EU are also expected to place downward pressure on prices in the short-term.
In 2012–13, the world cotton indicator price is forecast to fall by a further 10 per cent to US93 cents a pound. World cotton production is forecast to increase by 7 per cent in 2011–12 to a record 26.9 million tonnes.
The widespread economic downturn is expected to cut world cotton consumption by four per cent in 2011-12 to 24 million tonnes. It should increase again in 2012-13 by six per cent to 25.4 million tonnes. Australia will play its part in this surge with local cotton production forecast to increase by around 20 per cent in 2011–12 to a record 1.1 million tonnes. The forecast increase reflects a combination of high cotton prices at planting time and a second year of good supplies of irrigation water.
Australian cotton exports are forecast to increase by 89 per cent in 2011–12 to a record 955 000 tonnes. This forecast is driven by strong export demand and forecast record cotton production in 2011–12. Cotton exports are forecast to increase by a further 12.5 per cent in 2012–13, to a record 1.1 million tonnes.
If this pans out, Australia would become the third largest cotton exporter in the world, behind the United States and India and surpassing Uzbekistan.