The cotton market is also experiencing a worrying dance on the edge. Stuck in a price range of between 70 and 73.50 USC/Lb. for December, the market is showing its lack of confidence. And yet, a hesitant market like ours should have a sudden exit from this price tunnel in one direction or the other. Needless to say, at this stage many analysts are predicting a violent fall in prices.
So how far can the cotton market fall? 66 and then 55USC/Lb as some are predicting? worrying predictions, given that the dollar's current strength could ease after 5 November. We are not yet convinced, even if there is a lot of cotton this season, the outlook is not as gloomy as it seems:
- - Indian and Pakistani harvests are small and needs are constant.
- - The resilience of the Bangladesh and Vietnam markets is being confirmed.
- - China is present on the market to a lesser extent, but has changed its habits, giving pride of place to Brazilian cottons at such attractive prices.
- - According to a survey, 70% of the money collected from the sale of second-hand clothes is used to buy new ones
- - The profitability of cotton is also a serious obstacle to lower prices, as shown by this graph found on X:
This means that the next estimates of planted areas will be closely scrutinized.
The scissors effect on producers could have a dissuasive effect that will be felt as soon as the announced reduction in acreage is implemented. The only question is, what is a pound of cotton worth in absolute terms? The answer will determine the level of equilibrium in the profitability of market players.
Source: Mambo