grp2-cottonppt

8/7/2019 grp2-cottonppt

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International Commodity

Management

A presentation onCOTTON

By Group 2 : Kapil Manwani, Swati Sharma, DeekshaMishra, Seema Wadhwa, Tasmeet Singh, Aurore

Bouret, Palak Vadhera, Himanshu Sharma


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Cotton is a Kharif season crop.

Seeds are sown from April until mid June.

Grown in dry tropical and subtropical climates at

temperatures

between 11C and 25C.

the seeds should be planted in well-preparedmoist 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 areabout 12-15 cm in length and width.


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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 pickedeither manually or

mechanically.


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Source: UNCTAD secretariat, based on Geocoton and ICAC information


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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, usuallyfrom 600 to 1200 mm


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Uses of Cotton


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ProductionConsumption


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World cotton Imports


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Evolution of the share of selected regions in

world cotton fibre imports


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World cotton Exports


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Consumer still prefers cotton over polyester!!Factors Driving Cotton

For a $1,000 change in realper capita GDP 0.243 kgs(0.5 pounds) change in netdomestic cotton use

Largest economies: $1,000 0.196 kgs (0.43 pounds)

LDCs $1,000 0.286 kgs(0.63 pounds)


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Cotton is Fashionable & Safe

Safest Fiber for the Environment


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Cotton Prices: Market Situation About 80 countries produce cotton, but the U.S., China, and India

together provide two-thirds of the worlds volume. TheU

.S.,which ranks third in production, is the leading exporter,accounting for more than one-third of global trade in raw Cotton

Clothing retailers, were left reeling again when cotton pricesexceeded the US$1-a-pound barrier for the first time in 15 years

Executives predicted retail markups in the low-single digits for

holiday goods, including robes, sleepwear and other items,and said the more difficult challenge will be for spring 2011,when increases could be as much as 10%

The increases are the market's reaction to limited supply, largelyas a result of the devastating floods that have hit a number ofcountries in South Asia in recent weeks, strong demand, andinventories being run down

The Department of Agriculture in the US, which acts as thebenchmark for crop markets, has forecast that cotton inventoriesaround the world will fall in 2010-11 to 45.4 million bales, thelowest level for 14 years

Cotton Prices: Reasons

Poor weather conditions inChina the worlds topproducer of cotton damagedcrops.

An indefinite ban on rawcotton exports from India, theNo. 2 cotton producer.

Shrinking cotton inventorieswill drive the stocks-to-useratio to the lowest level in 16years, according to the U.S.Department of Agriculture.

Cotton mills in Pakistan mightshut. The country is the worldsfourth-biggest cotton producerbut relies on Indian imports fordomestic demand.

World consumption in 2010-11is forecast to exceedproduction for the fifth straightyear, the first time this hashappened in 50 years.


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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 fromOctober 1 to November 1.

With India the worlds 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 byOctober 10 Indias Office of the Textile Commissioner reported that all of the 4.3 million bales (5.5million 375 lb Indian bales) available for export have already begun the registration process

Given Indias limits on exports, there has been strong interest in securing cotton from the U.S. Thusfar 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 commitmentsthrough the end of September totaled 9.9 million bales, representing 52.4% of a U.S. harvestforecast to be 54.8% larger than it was in 2009/10.


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Cotton market share on the decline! End-use consumption of cotton will decline by

1.8% in 2008 and 2% in 2009, falling to 25.4million tons in 2009 (IMF, the ICAC Textile)

Other fibers consumption will reach 44.4million tons by 2009, although the decline rate isslowing down.

As a result, world total textile consumptionwould increase by 1.7% in 2008 but remainstable in 2009, and the market share of cottonwould continue to decline, dropping to 36.4% in2009.

Cotton consumption will resume its long-termgrowth in 2010, and reach 31.2 million tons by

2020. However, since consumption of otherfibers is projected to grow faster than cottonconsumption, the market share of cotton isexpected to decline to 31% by 2020

Source: IMF ICAC Textiles


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Share of Cotton at Retail: 36.4% in 2009Share of cotton declining rapidly in developing countries,

but industrial countries & CEEurope & USSR maintain steady share



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Cotton substitutes

Silk, Wool, Nylon (Natural fibers)

Rayon (Artificial fiber)

Polyester, Cotton wrapped polyester(Synthetic fibers)


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Principal substitute to cotton :

synthetic fibers

From 1 USD spent on textil:

- 23 cents spent on cotton

- the rest on synthetic fibers

Important oil price influence

From the last 30 years, the part of synthetic fibers in textile industry increased a

300% in the US.


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End-Use consumption of other fibers slated to increase!



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Market Influencing Factors

Relationship with other competitive fibers

World demand for consumer textile and demand fromthe 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 regardingthe cotton sector

Import-export scenario in the country

Fluctuation in currency value


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Importance of Cotton to African Economies


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Cotton producers in developing countries face anumber of problems, including:

Low and fluctuating prices for their products

Difficulties in getting their products onto theinternational market

Low productivity and poor competitiveness

Poor access to technology and finance Weak research and extension services (technical

support to farmers)


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Cotton Supply Chain

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