Global cotton trade is likely to grow at a flat rate for the 2006-07 crop year as demand remains strong but prices remain high, according to Cotton Council International. Drayton Mayers, the industry services director of the private organisation that aims to promote cotton exports worldwide, quoted the United States Department of Agriculture (USDA) as saying that the total cotton supply for the 2006-07 year, which starts on Aug 1, would fall slightly from the 2005-06 crop of 176.4 million bales, or 38.4 million tonnes, to 167.7 million bales or 36.5 million tonnes. (A tonne is equivalent to about 4.59 bales).  

Demand would rise to 26.5 million tonnes for the next crop, from 25.5 million now, said Mr Mayers, who was in Thailand last week to meet Thai textile and garment manufacturers.  

He said the price of cotton would likely rise next year, but could not say by exactly how much. Based on the 2005- 06 crop, the cotton futures price in the US market traded between 48 and 62 cents per pound but the average price was about 50 cents.  

''The stock-to-use-ratio is forecast at 38.9% for the next crop. The price rises when the ratio falls below 40%,'' he said, adding that the for the current crop was estimated at 44.7%.  

The world's cotton output will probably decline over the next year, partly because supply from the US, the world's largest cotton exporter, is likely to drop, although initial stock will be higher with carry-over from the 2005-06 crop.  

The USDA predicted that US cotton production would drop to 4.5 million tonnes in 2006-07, from 5.2 million tonnes, largely due to drought in Texas and California recently. Both states are major cotton production bases.

American farmers have also started to grow corn and soybeans instead as the crops have higher returns than cotton.

The stock-to-use ratio in the specific US market is projected to drop to 22%, from 28.3% in 2005-06.

The price of polyester is rising in line with that of its raw material, polymer, causing textile and apparel manufacturers to use more cotton, he said.

China remains the major cotton consuming country despite also being the world's largest cotton producer, according to Mr Mayers. It imports a large volume of cotton to manufacture finished products to export to third parties.

For the US market, in 2005, China was the source of one of the largest percentage increases in cotton textile imports into the United States. Cotton product imports from China grew to around 900,000 tonnes, up 88% from 2004, 375% from 2001 and 396% from 1997. China's share of imported cotton products in the US market increased from 10.9% in 2004 to 18.6% in 2005.

He said, generally, the outlook for cotton consumption in the global market for 2005-06 and the following crop was reasonable.

''Of course, the dark cloud on the horizon is the increasing oil price and credit-card debt, which causes consumers to spend slightly less money on clothing,'' he said.

''But on the bright side, there are new consumers in the world. No longer is consumption specific to developed countries. Consumption no longer depends on only the US, Europe and Japan.''

Mr Mayers said he was disappointed that the Thai-US free trade agreement negotiations had been put on hold when the Thai government dissolved Parliament in February. Among other benefits for the United States, the deal would enable American exporters to export more raw materials to Thailand.

Also, for Thailand to enjoy lower tariffs under the agreement, US negotiators are proposing that Thai apparel exporters would have to use raw materials that originated from the United States.

The United States supplies about 4.5 million tonnes of cotton worldwide annually. Thailand imports about 340,000 tonnes of cotton per year.