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Small farmers to profit from rising global cotton prices

07
Jun '10
Although, South Africa, that produces a little less than 0.5 percent of the international total of cotton, can never turn into a key player in the global cotton market.

However, for bulk producing cotton farmers, who manufacture about 95 percent of the country's yearly crop and the small-scale producing farmers, international cotton prices, which are close to record highs and are most likely to remain stable, are impacting their incomes quite nicely.

Currently, markets are being pulled in varied directions. Since March 9 2009, when cotton touched a bottom-price of $0.514 per pound, the three-month expected price of Cotton-2, the vital quality of cotton, listed on the leading US futures market, Intercontinental Exchange (ICE), increase to a level of $0.871 per pound, although, they have slightly come down since then.

But this is still far from the $0.97 per pound that was hit in July 2008, before the recessions. However, the recovery is also an indication of receding fears of world economic downturn.

Meanwhile, China continues to remain the dark horse, owing to its voracious demand for cotton, as bad weather destroyed majority of its crops. Following, such increased amount of demand is India and Pakistan.

Therefore, excepting for harsh double-dip inflation, prices of cotton are most likely on an ascending pathway.

Trade association, Cotton South Africa inform that, the on-going season will most likely witness a decline of 12 percent in the overall crop, to 39,500 cotton bales of 200 kilogram each, the smallest crop witnessed since the early '60s

Fibre2Fashion News Desk - India


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