Global Cotton Mill Use: Short-term Respite but Medium-term Uncertainty International cotton prices have steadied at around $1 per pound in January 2012 after decreasing for almost ten months. The main reasons behind this price stabilization seem to be the support provided by the Chinese government, via significant purchases from both the domestic and the foreign markets, and an improvement in demand for cotton. However, the medium-term outlook regarding world cotton mill use is still overcast. World economic growth is projected to slow in 2012. World cotton mill use is projected down by 3% in 2011/12 to 23.7 million tons. It could resume increasing in 2012/13 if the health of global economy improves. Global cotton production is rising by an estimated 7% in 2011/12, to 26.8 million tons. This would be the largest level of production achieved in five years. However, global production could drop to 24.9 million tons in 2012/13 due to the lower prices received by farmers this season, improving attractiveness of grains and soybeans, and rising agricultural production costs. As a result of the large excess supplies in 2011/12, global cotton stocks are rebounding by a third to 12.3 million tons, following two seasons at relatively tight levels. Production is expected to continue exceeding consumption in 2012/13, which could translate into further increase in global cotton stocks, to 12.9 million tons.