Since demand for cotton remains strong, international cotton trade is likely to grow at a flat rate for the 2006-07-crop year although prices remain high, reported Cotton Council International.
US is the world's largest cotton exporter but United States Department of Agriculture (USDA) predicts that US cotton production would drop due to drought in Texas and California recently.
Regions of Texas and California are major cotton production bases.
Also American farmers are now opting to grow corn and soybeans in place of cotton as these crops have higher returns than cotton.
Further, textile and apparel manufacturers are compelled to use more cotton, since the price of polyester is rising as a result of price rise in polymer.
Although China is world's major cotton producer, it remains the major cotton consuming country and has been importing large volume of cotton to manufacture finished products for exports.
United States would have been benefited if the Thai-US free trade negotiations were not put off due to dissolution of Thai government, as the deal would have enabled American exporters to export more cotton to Thailand.
US negotiators are proposing that Thai apparel exporters would have to use cotton that originates from the United States, if Thailand is to enjoy lower tariffs under the agreement.
Thailand imports about 340,000 tones of cotton annually and the United States supplies about 4.5 million tones of cotton worldwide per year.
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