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Incorporating Expectations into the ICAC Model of the Cotlook A Index

Carlos Valderrama


Projections of average cotton prices published by the Secretariat of the ICAC since January 1988, are based on a one-equation model that relates changes of the Cotlook A Index to changes in world supply and demand conditions.

The ICAC price model provides a simple quantitative basis for evaluating conventional supply and demand factors in the cotton market. The model uses conventional supply and demand inverted equations and, recognizing the increasing importance of China Mainland in international cotton trade, it differentiates between China's net cotton trade impact on world stocks-to-use ratio and the stocks-to-use ratio in the rest of the world.

Reprinted from Proceedings of the 1996 Beltwide Cotton Conferences pp. 73 - 77
©National Cotton Council, Memphis TN

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Document last modified Sunday, Dec 6 1998