The global economic crisis is set to hit the cotton tradeacross the globe. Cotton imports at the global level are expected to decrease12% to 7.3 million tonne in the current cotton year beginning October 2008.This has been projected by the International Cotton Advisory Committee (ICAC)after assuming curtailment in production by textile mills all over the globeduring the year.


ICAC estimates that hit by competition from chemical fibres amid slower globaleconomic growth, cotton consumption by textile mills would for the first timewitness a negative growth in the current year. Against this backdrop, ICACassumes cotton consumption by textile mills would decline 6% to about 24.9million tonne in the current season, which will subsequently lead to a declinein cotton imports in coming days.


Apart from the economic downturn, the projected decline in the income ofdeveloped economies in 2009, tightening credit availability for spinning millsand uncertainty regarding the prevalence of the global financial crisis are theother factors that will lead to a cutback in global demand for cotton, saidICAC in its latest report on the world cotton outlook.


The Washington-based global body is an association of governments which have aninterest in production, consumption, export and import of cotton. India, which is the second largest producer of cotton after China, is also a member of theassociation. World cotton trade would plummet this year due tolower-than-expected imports by China. Indications are that China's cotton imports may fall by 24% to 1.9 million tonne. Imports by the rest of theworld are expected to decline 7% to 5.4 million tonne, said the report.


Cotton production across the globe is also expected to decline in the currentseason. According to ICAC, world cotton production is expected to decline by 6%to 24.6 million tonne in 2008-09 due to shrinkage in the area under cottoncultivation. Though India is expected to increase its production by 3% to 5.5million tonne, a 30% fall in US production would drive down world cottonproduction.



Written by Kolkata Bureau: "The EconomicTimes"


Originallypublished in "The Economics Times" dated December 04, 2008