Cotton Outlook: Falling Consumption Accentuates 2011/12 Oversupply

Cotlook's world consumption forecast has fallen by a further 400,000 tonnes during the past month or so. Coupled with a modest increase in estimates of production, the adjustment raises this season's estimated surplus by over half a million tonnes, to a massive 3,556,000 tonnes. Hopes that the recent moderation of cotton prices, and their less volatile behaviour, would create the conditions for a swift recovery of world consumption, have steadily faded in recent months. Instead, the deteriorating economic outlook has become the dominant influence on the behavior of buyers throughout the cotton textile value chain. The consumption forecast for 2011/12 is now virtually at the same level as the estimate for the previous season.