Strong cotton demand is driving the price.
That’s the message from the International Cotton Advisory Committee (ICAC) during its 79th plenary session, “Fortifying the Cotton Supply Chain: New Approaches to New Challenges.”
Cotton prices at the current level may last during the 2021/22 season, but the chances of going beyond the current higher levels are not there, stated Matthew Looney, Data Scientist, ICAC.
With production higher in the United States and Brazil, going into 2021/22, stocks are available to satisfy the demand.
During the holiday season, there will be enhanced demand for cotton and textile products. But factors such as supply chain bottlenecks and the emergence of the Omicron variant may affect consumer buying.
“If we have a demand increase, stocks will be there,” added Looney.
A veteran cotton purchaser for a major textile mill in India recently noted that mills are expecting a leveling of cotton price. Mills are cautiously buying cotton for 10-day production needs and hoping that new arrivals will bring down the price in India. Countries like Vietnam and Bangladesh have also increased textile manufacturing and their demand for cotton.
“Prices cannot remain high,” stated Lorena Ruiz, Economist at ICAC. When prices crossed the 90-cent range in previous seasons, prices came down in the following seasons, she added.
While demand is still driving the price, given the stock levels, cotton prices may remain at their current level but hoping for a higher level may not be feasible. However, it is not precisely possible to predict how prices may trend given the supply-demand situation.
Dr. Seshadri Ramkumar is a professor in the Department of Environmental Toxicology and The Institute of Environmental and Human Health at Texas Tech University
Source: Cotton Grower