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China, India major players in future cotton prices
29
Jun '15
Courtesy: CAES, UGA/Clint Thompson
Courtesy: CAES, UGA/Clint Thompson
Two of the world’s largest producers of cotton, China and India, will play key roles in the future of cotton prices, according to University of Georgia cotton economist Don Shurley.

China is the world’s largest user and second-largest producer of cotton. The country’s actions relating to stocks and imports could be an overwhelming factor on the improvement of cotton prices for farmers. Cotton prices have been stuck in the 62 to 67 cents per pound range for the past nine months, a report on the University’s website said.

“What goes on over there is very important. It’s even more so now, because they hold 60 per cent of the world’s cotton stocks, or cotton left over from previous years that’s still on hand,” said Shurley, a researcher in the UGA College of Agricultural and Environmental Sciences. “Their policies affect how that cotton is used, how it’s moved into the supply chain and when it will have a big impact.”

Also a significant factor in future cotton prices is the monsoon season in India, the world’s largest cotton producer.

In Shurley’s biweekly newsletter, “Cotton Marketing News," he wrote that the Indian government forecasts the monsoon season as “deficit,” meaning the country’s cotton crop estimate could be lowered in future reports. India’s expected decrease in cotton production could impact the direction that prices take in future months.

Shurley said cotton farmers prefer to see prices reach the 80-cent plateau, a mark not seen since June 2014. The US Department of Agriculture (USDA) will release its estimate of actual cotton acreage planted in the US on June 30. Combined with the release of July production and supply/demand numbers, this information should provide clarity about the future of the cotton market by next month.

“There are so many factors, globally, that are in place now. Plus we’ve gone to, essentially, 24x7 trading. We’ve gone fully electronic now. Prices have a way of changing very rapidly,” Shurley said. (SH)

Fibre2fashion News Desk – India


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