Textile mills are expected to increase their use of cotton by about 3 percent to 126 million bales in the 2007-08 marketing year, the International Cotton Advisory Committee, an association of 44 governments of cotton producing and consuming countries, says.

That rate of growth would be smaller than in the previous three seasons but still higher than the long-term average of 2 percent per year, according to the ICAC's Secretariat, which is based in Washington.

The primary reasons for the slower growth: (1) A forecast decline in the rate of global economic growth; (2) an increase in international cotton prices; and (3) the fact that cotton has lost some of its price competitiveness compared to polyester in major markets since August of this year.

“World cotton production is estimated down by 3 percent to 120 million bales in 2007-08 (Aug. 1-July 31) due to a decline in area,” the ICAC said in its monthly outlook report. “Production is forecast down in China, in the United States, in Pakistan, in Turkey and in the CFA zone.” (The ICAC estimated 2006-07 production at 122.8 million bales.)

“India is the only major producing country where production is expected to increase this season, to a record of 24.34 million bales — nearly double the production of three years ago.”

With global cotton mill use expected to exceed global production in 2007-08 (126 million vs. 120 million bales), stocks are expected to decline by 10 percent to 54 million bales by July 2008. World cotton imports are forecast up by 9 percent in 2007-08 to 41 million bales, due to a projected rebound in Chinese imports.

The Secretariat, using the ICAC Price Model 2007, forecasts a season-average Cotlook A Index of 67 cents per pound in 2007-08 — 8 cents higher than in 2006-07. “This projected price increase is the result of an expected significant decline in the stocks-to-mill use ratio in the world — less China — in 2007-08,” it said.