How are the Cotlook Indices used?
The Cotlook A Index has long been regarded as the recognized barometer of world prices. It is used by the United Nations Committee on Trade and Development (UNCTAD) as a component of its agricultural price measure. It has been used since the nineteen seventies as the preferred price measure by the International Cotton Advisory Committee (ICAC), the “United Nations of cotton”, as the device by which that body follows price developments. The ICAC has developed a price-forecasting model which attempts to predict the season’s average level of the Cotlook A Index as a guide to its member countries. Since 1985, the Cotlook A Index has been the principal ingredient of the US Commodity Credit Corporation’s Upland ‘marketing loan’ (whereby US farmers borrow money from the government with their cotton as collateral, and repay the loan at a lower rate, if a value based on the Cotlook A Index is below the loan value). Since 1990, the US ‘competitive adjustment procedures’ have used the Cotlook Ind
