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Expectations of worldwide downturn in cotton production

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By Inaam El-Adawy

The Cotton Exporters’ Association predicts that worldwide cotton production will fall during the 2012-2013 season to 24.9 million tons.

In a recent report, the Association attributed the decline in production to the fall of prices during the 2011- 2012 period, which will drive cotton farmers to reduce output this season.

The study indicated that cotton textile factories reduced consumption by 7% during the 2011-2012 season, falling to 22.7 million tons, which is the lowest amount in eight years.

The Association predicts that consumption will rise by 3% in the 2012-2013 seasons but that the A Index would fall to 80 cents per pound in June 2012, down from 115 cents per pound in August 2011.

Ahmed Moustafa, head of the cotton affairs committee of the Cotton and Textile Industries Holding Company (CTIHC), stated that domestic production would decline along with worldwide production.

He expects domestic production to fall to 2.4 million tons, down from 3.6 million tons last year.

He noted that cotton prices this year will not change significantly from last year due to 1.2 million tons of surplus cotton from the previous year.

Ahmed El-Basaaty, a member of the Cotton Exporters’ Association, forecasts that the shortfall in cotton production in the coming season will not lead to a rise in prices.

He said that weak sales last season created a surplus of unsold inventory, mitigating possible price hikes in the coming season. He predicted that cotton farming would decline 30% in the coming season.

Reda El-Gharabawy, sales manager with the Farmers’ Union, called for increased cotton ginning capacity in the domestic market to avoid having to export raw long-fibre cotton for processing abroad.

Currently, Egypt imports processed long-fibre cotton at increased prices.

Total cotton exports during the 36th week of the current season reached 1,309 metric tons, bringing the total volume of cotton exported during the 2011-2012 season to 79,600 metric tons.

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