Last week, a crucial meeting for the cotton industry in Africa took place in Douala, Cameroon. The African Cotton Association convened so that leaders of private, public, and semi-public companies could share their experiences and discuss the challenges they face. Although the final communiqué has not yet been released, it is easy to imagine the main points:
- - How to compete with international rivals, particularly major exporting countries such as Brazil and the US
- - How to reduce increasingly high production costs, given the social role of cotton for African industries
- - How to encourage governments to honor their commitments to industries that are subject to the ups and downs of the international market, despite the excellence of their cotton.
- - How to encourage countries such as India to remove their import taxes or at least standardize them to enable African cotton to survive.
- - How to convince the European Union to favor textile products containing cotton from these origins by lowering duties when entering one of the 27 countries.
The shockwave caused by the new US customs policy has led to a radical change in trade flows, including for cotton. However, no one has taken into account the effects on African cotton, 95% of which is still exported.
All factors are currently conspiring against the industry, particularly the dollar, which continues to weaken against the euro, causing a drop in income for all countries with a fixed exchange rate with the euro.
The international market is flooded with Brazilian and American cotton, giving the market a false sense of vitality. In this context, it is difficult to know who is really coming out on top. Last week's WASDE report did not shed much light on the situation, as it was in line with expectations.
The current market momentum can be seen every week in the USDA's export report, which has been posting convincing figures week after week.
Similarly, projections for cotton acreage in the US for the next season were down but in line with expectations, with no reaction from the market.
The end of the March 2026 contract highlighted the fragility of the market, which approached its lowest point. Positions were quietly rolled over to the May 2026 contract, taking advantage of the attractive spread in a carry market.
The elections in Bangladesh took place calmly, allowing power to be handed over to one party without ambiguity. We can therefore commend the work of Mr. Yunus, who served as interim prime minister and ensured economic stability during the transition. India has finally found common ground with the United States on customs tariffs, which should restore some calm, particularly in the textile sector.
It is in this environment that we will enter the Year of the Horse in Asia, with Ramadan beginning at the same time as Carnival is in full swing. Happy holidays to all.
Source: Mambo