Global trends in fibre prices, production and consumption, September-October 2008

25 pages, published in Issue 137, September-October 2008   Report price: Euro 395.00; US$ 520.00

World fibre production rose by 6.0% in 2007. The rise stemmed from an 8.5% increase in global man-made fibre output, which was driven mainly by growth in China and India. Synthetics accounted for most of the volume increase in global man-made fibres, led by polyester. In percentage terms, however, production of cellulosic fibres grew faster than that of synthetics.

Output of natural fibres rose by only 2.6% in 2007. As a result, the gains in share of the previous two years were lost, and the share of natural fibres fell back to 40.6%. The 2.6% increase was driven mainly by a 2.8% rise in cotton demand. Wool consumption, by contrast, fell as a result of higher prices.

The cotton price rose to a high of 80 cents/lb in March 2008 before falling back—due to market unrest—to 55 cents/lb by November 2008. For the 2007/08 crop year as a whole (August 1, 2007-July 31, 2008), the average price reached 73 cents/lb, 23.2% higher than in the previous year. However, there is little prospect of a further price increase in 2008/09 as long as concerns over weaker demand persist. The International Cotton Advisory Committee (ICAC) predicted in early December 2008 that demand would fall by 5.6%. This is somewhat steeper than the 0.5% drop recorded for 2007/08 and signals a major downturn. That said, output will fall too as farmers switch to more profitable alternative crops. As a result, cotton stocks will fall. But the reduction in stocks will not be sufficient to increase prices. Consequently, the average cotton price is expected to fall from 73 cents/lb in 2007/08 to 69 cents/lb in 2008/09.

Wool prices have fallen dramatically from a peak of A$10.29 per kg (US$9.07 per kg) in January 2008—reaching A$7.64 per kg in November 2008. Again, the fall reflects concern over future demand levels. Stocks have fallen too although the stock position is not a cause for concern. While consumption of wool fibre remains strong in China, it is being depressed elsewhere by the restructuring of the textile industries in industrialised countries. Prices are therefore likely to remain stable in 2008/09. Stocks, meanwhile, are expected to fall a little further from levels reached in 2007/08 as demand marginally exceeds supply.

Global Trends in Fibre Prices, Production and Consumption

• Summary
• General Trends
• Cotton
• Wool
• Man-Made Fibres

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• Asian Man-Made Fibre Production Continues to Soar but Will Green Issues Lead to a Change of Direction?, (2nd quarter 2008)
• Organic cotton: measures taken to encourage market growth, (1st Quarter 2008)
• Global trends in fibre production, consumption and prices, March-April 2008, (March-April 2008)

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