The foreign area response to prices this year “has also been outstanding,” Nicosia said. Worldwide, Nicosia expects a10 percent increase in cotton acres to about 93 million acres, possibly the highest in history “and a fitting response to the price action we’ve seen over the past year.

“French West Africa is going to see a 17 percent increase in cotton area and in Greece and Turkey, a 27 percent increase. In China, although their response has been more muted, they are expecting a 7 percent increase. India’s cotton area has responded by over 10 percent for a 3 million acre increase this year.”

Nicosia says India will grow a 29 million bale crop this year, but since they consume only 20.5 million bales, “this will leave them as a formidable competitor in the foreign market.”

Another question is whether India’s protectionist tendencies will again provide opportunities for U.S. exports. Last season, Indian export bans along with a global shortage of cotton resulted in “one of the greatest runs in history in U.S. cotton export sales, along with one of the greatest runs in history for cotton prices.

“However, India does produce cotton very cheaply, and it will maintain and expand cotton area even at current prices. It is possible that in the next five years, India will be the world’s largest cotton producer and its exports will rival those of the United States.”

Intense competition will also come from Australia, which has good water supplies “and with cotton at near $1 a pound, it will grow 4.7 million bales, almost all of it for export. That’s a major departure from recent years in which production has been under 2 million bales.

“Brazil will also produce a very large crop, between 8.5 million to 9 million bales in 2011-12, while consuming only around 5 million bales with the balance for export.”

Nicosia noted that large unsold stocks in Uzbekistan and Turkmenistan from 2010-11 as well as the unsold new crop harvest “will also have to fight for export share.”

Nicosia reminded listeners that a year ago, cotton fundamentals and prices were relatively stable. “As the season began we were in recovery and on track to consume 120 million bales globally. But the combined disasters in Pakistan and China brought the world crop under 113 million bales, when stocks were already tight, causing us to have to destroy the use of 7 million bales.

“It took prices to over $2 a pound before that job was done. Inverses of almost 80 cents a pound provided the entire pipeline with the incentive to contract and suppress nearby spinning activity as much as possible. The destruction of demand caused large export sales cancellations and switches to polyester.”

As this year’s new crop becomes available, “the question is when will more normal spinning activity occur,” Nicosia said.

The Cotton Roundtable was sponsored by the Intercontinental Exchange, Certified FiberMax, Cotton Incorporated, Ag Market Network and Farm Press Publications.

erobinson@farmpress.com