International Commodity

Management

A presentation on
COTTON

By Group 2 : Kapil Manwani, Swati Sharma, Deeksha

Mishra, Seema Wadhwa, Tasmeet Singh, Aurore
Bouret, Palak Vadhera, Himanshu Sharma
 Cotton is a Kharif season crop.
Seeds are sown from April until mid June.
Grown in dry tropical and subtropical climates at
temperatures
between 11°C and 25°C.

the seeds should be planted in well-prepared

moist soil with high nutrient supplying capacity.
its moisture and nutrient uptake is remarkable

Seedling emergence can occur between one week

and a month after planting. During this phase (
germination, emergence and seedling growth), the
plant needs warm temperature and much moisture
(7,000 to 9,000 m3 by hectare), which can be supplied
by nature or by means of irrigation. Cotton leaves are
about 12-15 cm in length and width.
flowering generally starts one month and a half to two months
after the crop is planted.
Blooming will continue regularly for several weeks, even
months, as long as growing conditions are suitable.
After flowering, the inner part of the bloom gradually develops
into a fruit (called "cotton boll"). Cotton bolls keep growing
until full size (approximately 2 to 3 cm width). It will take about
two months between the blooming of the flower and the first
opening of the bolls.

Cotton bolls burst open upon maturity, revealing soft

masses of fibres.
Cotton harvesting is then possible The cotton is picked
either manually or
mechanically.
Source: UNCTAD secretariat, based on Geocoton and ICAC information
 How is cotton produced?
• Soft, fluffy staple fiber.
•  The plant is a shrub native to tropical and
subtropical regions.
• The fiber is spun into a yarn.
•  Cultivation of cotton requires plenty of
sunshine, and a moderate rainfall, usually
from 600 to 1200 mm
Uses of Cotton
 Production
Consumption
World cotton Imports
Evolution of the share of selected regions in
world cotton fibre imports
World cotton Exports
Consumer still prefers cotton over polyester!!
Factors Driving Cotton

 For a $1,000 change in real

per capita GDP  0.243 kgs
(0.5 pounds) change in net
domestic cotton use

 Largest economies: Δ $1,000

Δ 0.196 kgs (0.43 pounds)

 LDCs Δ $1,000 Δ 0.286 kgs

(0.63 pounds)
Cotton is Fashionable & Safe

Safest Fiber for the Environment

 Cotton Prices: Market Situation
• About 80 countries produce cotton, but the U.S., China, and India Cotton Prices: Reasons
together provide two-thirds of the world’s volume. The U.S.,
 Poor weather conditions in
which ranks third in production, is the leading exporter, China — the world’s top
accounting for more than one-third of global trade in raw Cotton producer of cotton — damaged
crops.

• Clothing retailers, were left reeling again when cotton prices  An indefinite ban on raw
exceeded the US$1-a-pound barrier for the first time in 15 years cotton exports from India, the
No. 2 cotton producer.
– Executives predicted retail markups in the low-single digits for
holiday goods, including robes, sleepwear and other items,  Shrinking cotton inventories
and said the more difficult challenge will be for spring 2011, will drive the stocks-to-use
when increases could be as much as 10% ratio to the lowest level in 16
years, according to the U.S.
Department of Agriculture.
• The increases are the market's reaction to limited supply, largely
as a result of the devastating floods that have hit a number of  Cotton mills in Pakistan might
shut. The country is the world’s
countries in South Asia in recent weeks, strong demand, and fourth-biggest cotton producer
inventories being run down but relies on Indian imports for
domestic demand.

• The Department of Agriculture in the US, which acts as the  World consumption in 2010-11
benchmark for crop markets, has forecast that cotton inventories is forecast to exceed
production for the fifth straight
around the world will fall in 2010-11 to 45.4 million bales, the year, the first time this has
lowest level for 14 years happened in 50 years.
 Cotton Prices: India Market Situation
• Complicating tight supply conditions are trade restrictions

– India recently announced it was going to further delay fiber exports, postponing the start date from October 1 to
November 1.

– With India the world’s second largest exporter, there is strong interest in securing Indian cotton while it is available.

– Fiber exports from India require registration. The registration process opened on October 1 and by October 10
India’s Office of the Textile Commissioner reported that all of the 4.3 million bales (5.5 million 375 lb Indian bales)
available for export have already begun the registration process

– Given India’s limits on exports, there has been strong interest in securing cotton from the U.S. Thus far into the crop
year, U.S. export sales have averaged more than 500,000 bales a week, a pace exceeding that from 2005/06 when
U.S. exports reached a record 17.7 million bales.

– The USDA forecasts 2010/11 U.S. exports to total 15.5.million bales. U.S. export commitments through the end of
September totaled 9.9 million bales, representing 52.4% of a U.S. harvest forecast to be 54.8% larger than it was in
2009/10.
 Cotton market share on the decline!
 End-use consumption of cotton will decline by
1.8% in 2008 and 2% in 2009, falling to 25.4
million tons in 2009 (IMF, the ICAC Textile)

 Other fibers consumption will reach 44.4

million tons by 2009, although the decline rate is
slowing down.

 As a result, world total textile consumption

would increase by 1.7% in 2008 but remain
stable in 2009, and the market share of cotton
would continue to decline, dropping to 36.4% in
2009.

 Cotton consumption will resume its long-term

growth in 2010, and reach 31.2 million tons by
2020. However, since consumption of other
fibers is projected to grow faster than cotton
consumption, the market share of cotton is
expected to decline to 31% by 2020

Source: IMF ICAC Textiles

 Share of Cotton at Retail: 36.4% in 2009
Share of cotton declining rapidly in developing countries,
but industrial countries & CE Europe & USSR maintain steady share

Source: IMF ICAC Textiles

 Cotton substitutes

• Silk, Wool, Nylon (Natural fibers)

• Rayon (Artificial fiber)

• Polyester, Cotton wrapped polyester

(Synthetic fibers)
 Principal substitute to cotton :
synthetic fibers
From the last 30 years, the part of synthetic fibers in textile industry increased a
300% in the US.

From 1 USD spent on textil:

- 23 cents spent on cotton
- the rest on synthetic fibers

 Important oil price influence

 End-Use consumption of other fibers slated to increase!

Source: IMF ICAC Textiles

 Market Influencing Factors

• Relationship with other competitive fibers

• World demand for consumer textile and demand from the
cattle-feed industry in the country
• Discovery of new cotton markets
• Introduction of new and developed technology
• Fluctuations in domestic cotton production
• Delays in the arrival of cottonseed for crushing
• Price and other policies of the government regarding the cotton
sector
• Import-export scenario in the country
• Fluctuation in currency value
Importance of Cotton to African Economies
Cotton producers in developing countries face a
number of problems, including:
• Low and fluctuating prices for their products
• Difficulties in getting their products onto the
international market
• Low productivity and poor competitiveness
• Poor access to technology and finance
• Weak research and extension services (technical
support to farmers)
Cotton Supply Chain