Cotton prices expected to rise in August-January 2021-22: TexPro

The main reason for the likely rise in the Index is the increase in consumption compared to the overall global production of the white fibre.

Both Bangladesh and Turkey have increased their cotton consumption by 50,000 tonnes, boosting global cotton consumption. There is also a surging demand for cotton from the West (read the US and Brazil) from Bangladesh, Turkey and southeast Asian economies, especially Vietnam. Also, favourable trading conditions have been observed in cotton yarn. In all, total global consumption has exceeded 26 million tonnes.

Meanwhile, China's cotton reserves have reduced as the government has stopped buying cotton for state reserves. Though the supply from other countries like India, Brazil and Australia have increased, it is not sufficient to offset the decline from China reserves.

Source: TexPro

The monthly average Cotlook-A Index was $0.84 per pound in the marketing year (MY) 2018-19. It declined by 15.49 per cent to $0.71 per pound in MY 2019-20 due to the impact of COVID-19 pandemic. It recovered in the MY 2020-21 with a rise of 19.17 per cent and reached to monthly average of $0.85 per pound, according to Fibre2Fashion's market intelligence tool TexPro.

Now, the monthly average of Cotlook-A in H1 of MY 2021-22 is expected to move up further by 19.38 per cent over the monthly average of $0.85 per pound in MY 2020-21.

Global cotton production in MY 2018-19 was 118.57 million 480 lb bales. It increased to 121.42 million 480 lb bales in the MY 2019-20 with a rise of 2.40 per cent. It suddenly decreased to 112.56 million 480 lb bales in MY 2020-21 with a drop of 7.30 per cent. However, it is expected to move up further to 119.39 million 480 lb bales in H1 of MY 2021-22 with a surge of 6.07 per cent over production in the previous year.

Fibre2Fashion News Desk (RKS)