Dunavant bullish on cotton outlook

13 January, 2003

___Renowned US-based cotton expert, Bill Dunavant Jnr, has provided a positive outlook for future world cotton prices, consumption, stocks and carryover, in a bullish address to the annual Beltwide Conference in the United States._

His comments have been captured in the In Season Comments > Beltwide Briefings, http://www.csd.net.au/inseasoncomments.asp?doc=887)

Pictured right: Bill Dunavant Jnr addresses the recent Beltwide Conference in the USA.

Mr Dunavant said world cotton production this year was forecast to reach 87.5 million bales, while consumption would rise to 95.4 million bales, leaving a carryover of 38.8 million bales, a fall of 8.1 million bales on the previous year.

He forecast that world production would rise 8 per cent next year due to price incentives, rising to 94.5 million bales, while consumption would rise to 97 million bales, leaving carryover stocks at 36.3 million bales, which would be a “price friendly result.”

Mr Dunavant said this year’s US crop would reach only 17.1 million bales (should have been 19 million bales with normal weather), while domestic consumption would fall to 7.5 million bales and exports would reach 10.8 million bales, leaving US domestic carryover about one million bales lower at 6.4 million bales.

He forecast a US crop next year of 17.5 million bales, domestic consumption at 7.3 million bales, exports at 10.9 million bales, and carryover down further at 5.4 million bales, hence a drop of 2 million bales in two years.

Mr Dunavant told the Beltwide conference that Australia would be lucky to produce 1.6 million bales this year, down from 3.2 million last year, and predicted that if water continued to be limited the cotton crop next season would be less than 1 million bales.

He praised the quality of Australian cotton, noting its good grade, staple, strength and micronaire, and its freedom from contamination, all qualities that help generate significant price premiums on world markets.

Mr Dunavant highlighted recent developments in China, noting production this year of 21.5 million bales, with domestic consumption reaching 27 million bales, and its carryover dropping from 13.6 to 9.4 million bales this marketing year, which would require imports of around 2 million bales.

He said China had better textile technology than most other developing countries and for this reason would continue to capture market share. He expects China’s domestic consumption of cotton to expand by 2.5 per cent a year for the next three years, reaching 29 million bales annually in three years’ time.

While not identifying any individual country, Mr Dunavant said there was instances of cheating and illegal imports of cotton textiles in the US, making a plea for tighter monitoring and control of textile imports.

He expressed dismay at the demise of the cotton textile industry in the US, where throughput had diminished from 11.5 million bales five years ago to 7.5 million bales this year, with projections that it may go as low as 5.5 million bales over the next five years.

He expressed support for modest US Government assistance to cotton producers, manufacturers, merchants and exporters, arguing that the decay of the textile industry cannot be allowed to spread to other industry segments.

While warning that competition from man-made fibres would continue in both volume and value, Mr Dunavant was bullish on world cotton prices in the shorter term, commenting that lower world and US carryover, rising world consumption and short supplies of high grade cotton, would underpin and expand recent price gains.