Optimism about China’s demand and an improvement in general risk appetite among investors have led to a 10% increase in the benchmark Memphis cotton price, to around 90 cents per lb, from its 2011 low in December. However, we believe that the influence of both these factors will fade, leaving the market in excess supply. Consequently, we expect cotton prices to fall by more than a third, to around 60 cents, by the end of 2012.