LONDON (Commodity Online) : International Cotton Advisory Committee (ICAC) reduced global cotton output forecast for 2010-11 by 700,000 tones to 9.8m tonnes, resulting a jump in prices.
According to ICAC, the revision reflected in part a trim of 100,000 tonnes, to 4.0m tonnes, in the forecast for production in the US, the world's top exporter.
Cotton prices hit their highest since 1995 after yarn gurus sliced their estimate for world stocks, and pegged supplies at their tightest for 21 years.
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However, the committee's main changes were to its estimates for world consumption, which it raised to 25.1m tonnes, and imports, which it hiked by 500,000 tonnes to 8.5m tonnes.
Imports are expected to continue to recover as the rebound would be driven by China, the world's biggest cotton user, said the ICAC in its report.
The revised estimates cut the level of stocks, as compared with consumption, to 36%, the lowest since 1989-90, and indicated a tighter market than the latest figures from the US Department of Agriculture, whose estimates are used as benchmarks in farm commodity markets.
The USDA last month forecast cotton's stocks-to-use ratio, a key measure of market tightness, which in turn has a big impact on prices, falling to 38% and the lowest for 16 years. The department will unveil fresh data next week.
The ICAC lifted its forecast for the average 2010-11 Cotton price, as measured by the Cotlook A index, by 4 cents to 89 cents a pound.
However, it urged caution over its forecasts, warning that "the decline in stocks as a percent of supply suggests that cotton prices in 2010-11 will remain unusually susceptible to changes in crop prospects.
The destruction of 16% of the cotton crop in Pakistan, the world's fourth biggest producer, had exacerbated the market squeeze.
