Barring another dip into recession, world cotton consumption for 2010-11 is on track to exceed its pre-recession peak of 120.8 million bales, and could perhaps reach 121.6 million bales, according to Joe Nicosia, Allenberg president and CEO.
A big reason for the rosy consumption projection is that demand for apparel has almost recovered to pre-recession levels, according to Nicosia, speaking at the Cotton Roundtable in New York City.
Nicosia projects world production at 119 million bales, 2.5 million bales less than projected consumption. “Clearly the market is uncomfortable about whether we’re going to have a deficit around the world. July-December futures are trading at a 3-cent inverse, which is telling us that there is anticipation of tight supplies coming at the end of this year.”
A projected 18.3-million bale deficit between foreign production and consumption for 2010-11 is a big reason for excitement over U.S. export prospects, Nicosia says. “Foreign” refers to production and consumption outside the United States.
“The rest of the world is going to use 18.3 million bales more than it produces. If the United States does not have a huge crop, the world would not have enough cotton to meet demand. Foreign stocks are extremely low, so the export prospects we have today could easily blossom and move up, if the overseas crops are not also extremely large.”
Nicosia says that from now until the world new crop starts coming out of fields, the United States “faces very limited competition for export sales. Literally, every country in the world is sold out. So we’re going to continue to be able to build an export base and put on a great deal of sales.”