Home / Knowledge / News / Textiles / Rebound in cotton prices attributed to supply deficit

Rebound in cotton prices attributed to supply deficit

09
Apr '10
According to insights from raw materials experts cited in the analysis, in the next 12 months cotton, key materials used in many healthcare products – will experience price increases as the international economy rebounds, the value of the dollar increases and demand exceeds supply.

Cotton prices have rebounded after the steep decline that coincided with the onset of the credit crisis.

According to Cotton Incorporated's Supply Chain Economist Jon Devine and Senior Manager of Supply Chain Initiatives Jan O'Regan, much of the rebound in cotton prices can be attributed to a supply deficit in the current 2009/2010 crop year. With corn and soybeans offering farmers more attractive returns for the past several seasons, cotton acreage and production have declined worldwide for the past three crop years. Despite the reduction in production last crop year, the reduction in consumption brought about by the weakness in the global economy kept prices low. Due to large numbers of cotton farmers and low cotton prices last year, governments in China and India made significant purchases to reduce excess supplies and support prices.

As the global economy has strengthened over the past 12 months, demand for cotton re-emerged and it is expected that the amount of cotton consumed in 2009/2010 will exceed that amount of cotton that was grown by 13.5 million bales (about 12 percent of 2009/2010 world consumption). Making up this production deficit are cotton stocks. Virtually all of the cotton that was accumulated by China and India has since moved out into the market. When stocks are drawn down, prices tend to increase and this is a major reason why cotton prices have rallied in recent months.

Devine and O'Regan predict:

• In the short term, which can be defined as the time period before next crop year's harvest becomes available in the fall, prices can be expected to at least maintain their current trading range due to the production/consumption gap.
• In the longer term, the question is whether the expected increase in cotton production in 2010/2011 will be large enough to overcome both the production/consumption inherited from the 2009/2010 crop year and any consumption growth in 2010/2011. With cotton prices the most favorable they have been in years, current forecasts project a more than 10 percent increase in world cotton acreage and production in 2010/2011. World cotton consumption is forecast to increase 2 percent in 2010/2011.

Devine and O'Regan emphasize that planting decisions, which are currently being made in major cotton growing countries, and the weather throughout the 2010/2011 growing season are principal sources of uncertainty in the current cotton market.

Premier Inc


Must ReadView All

Pic: Shutterstock

Textiles | On 3rd Apr 2020

UKFT campaigns to support small companies amid COVID-19

UKFT is urging the government to provide support for individuals or...

Pic: Shutterstock

Apparel/Garments | On 3rd Apr 2020

China's silk town Shengze sends face masks to Milan

The Shengze Chamber of Commerce in the city of Suzhou in China’s...

Pic: H&M

Fashion | On 3rd Apr 2020

H&M awards €1 mn to five innovations of fashion industry

From lab-grown cotton and creating fabrics from protein DNA, to...

Interviews View All

Textile industry, Head honchos

Textile industry
Head honchos

Quality should be the #1 priority

Amardeep Singh, Orient Craft

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Akash Khetan, Narayan Tex Fab

Akash Khetan
Narayan Tex Fab

I find it hard to find professionals in Surat

Bora Akris,

Bora Akris

Realkom, headquartered in Istanbul, is a fully integrated textile company...

Fiorella Cattelan,

Fiorella Cattelan

With flexibility and versatility, Dettin strives to meet the specific...

Christiane Thies,

Christiane Thies

Founded in 1892, Thies has concentrated on the fabrication of high-quality ...

Mark Paterson, Technical Absorbents Ltd

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Georg Reinhold, Trützschler  Nonwovens & Man-Made Fibers

Georg Reinhold
Trützschler Nonwovens & Man-Made Fibers

Trützschler Nonwovens & Man-Made Fibers, a part of the Trützschler Group,...

Mr Ambrose Chan, DSG International (Thailand) PLC

Mr Ambrose Chan
DSG International (Thailand) PLC

Ruma Devi, Gramin Vikas Evam Chetna Sansthan

Ruma Devi
Gramin Vikas Evam Chetna Sansthan

Ruma Devi is a jet-setting promoter of artisans who has empowered...

Sweta Agarwal, A Humming Way

Sweta Agarwal
A Humming Way

A Humming Way (AHW) is inspired by the old-world regalia of Rajasthan...

Mike Hoffman, Gildan Activewear SRL

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


March 2020

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search