Cotton Commodity Consumption Fall Expand Global Stockpiles, Driving Prices Decline for 2011

When cotton prices fell in 2011 as a tender controlled by a decreased consumption of cotton, what are the estimated price of cotton in 2012? This is a very important question, but the answer will be very helpful for cotton producing countries.

According to the U.S. Department of Agriculture, cotton production will rise 7.5 percent, or about 27 million metric tons during the last 12 months. So that the world cotton consumption in the prediction will be sufficient in 2012.
Cotton dropped 58 percent since reaching all-time high of $ 2.197 in March as investors bet that prices will hamper demand and encourage supply. Output rose from Australia to China to India, more than compensating for the decline in U.S. crop conditions caused by the worst since the dust bowl era of the 1930s. Speculators in the U.S. futures are currently the most bullish in 2-1/2 years, the Commodity Futures Trading Commission data show.

The decline of cotton in the year 2011 by 37 per cent fall in cotton prices meant that most of the 24 commodities in the GSCI gauge Standard & Poor's, which advanced 3.2 percent. Fibers rose the most in 2010, adding 92 percent. The MSCI All-Country World equity index fell 8.8 percent since the end of December and Treasuries returned 8.8 percent, Bank of America Corp. showed the index.

Cotton commodities will reach 85 cents in six months, Goldman Sachs Group Inc. said in a report 10 November, reducing the previous estimate of $ 1. The most widely held options on futures give holders the right to sell at 90 cents by February 10, according to ICE Futures U.S. data.

USDA reduces global cotton demand is estimated five times in the last six months, on expectations that global growth is slowing. Consumption contracted more than 11 percent in 2009, the most in at least half a century, during the worst global slump since the Great Depression.