The index has since remained above US140c/lb (about R22/kg), reported Cotton South Africa in its latest market report.According to the International Cotton Advisory Committee (ICAC), the volatility in the Cotlook A Index for the past three months was the highest since the index was established in the 1960s.
The current high price of cotton was primarily due to low global cotton stocks and continued demand by spinning mills, reinforced by panic which was brought about by a fear of defaulting on contracts, stated the ICAC.The global cotton stocks decreased by 25% in 2009/10 while demand increased by 5%. In spite of the higher production forecasted for 2010/11, the ICAC expected the smaller increase in demand to keep global stocks tight.
