THE CHINA NATIONAL RESERVE IS ABSORBING A LARGE PORTION OF THE 2011/12GLOBAL COTTON CROPGlobal cotton production is forecast 8% higher in 2011/12, compared with 2010/11, at 26.8 million tons, whereasconsumption could decline by 2% to 23.9 million tons. As a result of the projected surplus of 2.9 million tons,global cotton stocks could rebound to 11.9 million tons by the end of 2011/12. This recovery follows twoseasons of relatively tight global stocks.Almost 40% of the gain in global stocks this season could take place in China, due to the rebuilding of thenational reserve. Between October 8 and December 30, 2011, a total of 2.1 million tons of domestic cotton werepurchased for the China national reserve. Daily purchases are continuing. There is no limit to the amount ofdomestic cotton to be purchased by the national reserve this season. In addition, it is reported that about onemillion tons of non-Chinese cotton has been bought for the reserve; this cotton will be shipped to China over thenext few months. Overall, the national reserve, which was almost exhausted by the end of 2010/11, could growby at least 3 million tons or 11% of 2011/12 global production. It is possible that some of the reserve cotton willbe sold later in the season. Outside of China, cotton stocks are expected to grow by 26% to 8.7 million tons in2011/12, the largest in four years.The lack of demand for cotton and ample supplies are placing downward pressure on prices. The Cotlook AIndex dropped from 114 cents/lb in early August 2011 to 93 cents/lb in late December 2011. The averageCotlook A Index for the first 5 months of 2011/12 is 109 cents/lb or a third lower than the 2010/11 full-seasonaverage.


                                          2010/11              2011/12                  2012/13          2010/11        2011/12       2012/13 

                                                                                              Million Tons Changes from NovemberMillion Tons

 Production                      24.872                   26.788                   24.91              -0.007      -0.091             -0.232

 Consumption                   24.459                 23.866                    24.69               -0.037       -0.521            0.202 

Exports                              7.625                   7.624                    8.48                 0.001       -0.101              -0.327

 Ending Stocks                   9.010                11.931                    12.15               0.004           0.434             0.077 

 Cotlook A Index*             1.64 1.09*** 

Season-average Cotlook A Index (U.S. $ per pound).*

 Average for the first five months of the season (August to December 2011).(Press releases are available via e-mail. For further information, please contact us at International Cotton Advisory Committee is an association of governments of cotton producing and consuming countries. TheSecretariat of the Committee publishes information related to world cotton production, supply, demand and prices, and provides technicalinformation on cotton production technology. Detailed statistics are found bimonthly in COTTON: Review of the World Situation, $185 peryear. A monthly outlook is available on the Internet for $295 per year. Access to the weekly estimates of world cotton supply and use by theSecretariat is also available on the Internet for $460 per year