Cotton is a soft fiber that grows around the seeds of the cotton plant. It is a key resource for many consumer and industrial products. The largest cotton producers are the United States, India, China, Egypt, Pakistan, Sudan, and parts of Eastern Europe. The document discusses how cotton prices fell significantly due to weak demand from large fiber and yarn inventories. Demand dropped over 400,000 tonnes, especially in China which accounts for 30% of global cotton demand. Supply increased around 10.7% due to higher production in key countries and improved growing seasons.

1. COTTON
 Cotton is a soft fiber, grows around the seeds of the
cotton plant
 It is the basic resource for thousands of consumer
and industrial products
 The biggest cultivators of cotton are America, India,
China, Egypt, Pakistan, Sudan and Eastern Europe
 US have a considerable share in world exports
 India and China both fall short of their domestic
requirement and are net importers

2. PRICE TRADE OF COTTON
•Cotton prices fell across the
board on domestic and
international markets
•As demand remains
extremely weak amid large
fiber and yarn inventories
•Correction in cotton prices
has done
•Highest Price 245 Cents/lb
•Lowest price 145 Cents/lb
Source: Http://www.cottoninc.com

3. Demand

4. Demand
(Total Demand 24.6m tonnes, Reduced by over 400,000 tonnes)
Major factors of low Demand:
 Significant fall of Cotton Demand in China, accounts 30% of Global
Cotton
(Around a drop of 17% in the month of May 2011)
 Buyers’ future expectation
(Waiting for new crop to come in the market)
 Substitution Effect
(Result of rise cotton price, mills substituting cotton with
-synthetic fibers,
-notably polyester
-and viscose (rayon))
 The rapid rise and decline in cotton prices since September 2010, made
cotton storage companies suffer great losses

5. Supply

6. Supply
(Total Supply around 24.35m tonnes, 10.7% increase)
Major factors affected Supply:
 Driven to a significant degree by the surging cotton prices
• World Cotton Production: 26.8 Millions of metric tons
• World Cotton Exports: 8.3 Millions of metric tons
 Production increased by between 9.6% and 13% as the result of
increased production in key countries
 Improved seasonal conditions
 Higher plantings

7. CONCLUSION
 Cotton plays a significant role among the most useful
commodities
 Its expected, price of Cotton will further fall down
 Cotton and cotton textile industries are central to the economic
growth of both developed and developing countries
 It is the raw material of wealth, industrialization and
development