ICE December cotton jumped 4.1 per cent , or 5 cents on Monday to $1.2471 a pound, the highest price since cotton futures began trading 140 years ago. The fibre has risen 13 per cent in the past four days' trading.
Olam is one of the world's largest cotton companies, with a strong presence in most producing and consuming countries. They have a global supply network of over 100,000 farmers, ginners and suppliers and an established and diversified customer base across all markets.
Olam initially focused on growing our cotton business in Africa and Asia, which has always been a strong geographical base for Olam. With a clear vision and a well-executed strategy, the cotton business has grown rapidly, expanding origination, ginning and marketing capabilities to become a leading supplier of choice for African and Asian cottons. In 2007, Olam acquired Queensland Cotton, firmly establishing our footprint in Australia and strengthening our position in Brazil and the USA.
French trading house Louis Dreyfus and Olam International, which is based in Singapore are in merger talks, although they are still in the early stages the deal could see the emergence of a trading house accounting for 30 per cent of the global cotton market.
The tightness in the cotton market is being driven by surging demand for clothes made of cotton from China and other emerging countries. At the same time, supply is stagnating as farmers in the US moved into more profitable crops, such as soyabeans.
The US Department of Agriculture estimates that global demand of cotton has outstripped supply for the past five consecutive seasons. Hussein Allidina, head of commodity research at Morgan Stanley in New York, said the rising price of cotton, which comes as grains such as wheat and corn have also jumped, was "intensifying next year's acreage fight" in the US, the world's largest exporter of many agricultural commodities.