Since April last year, the price of international cotton futures has doubled, and cotton futures in New York once rose to about 158 cents per pound, constantly refreshing new highs since May 2011.
Relatively speaking, the domestic cotton spot price is relatively stable as a whole, but it is also facing a dilemma. Due to the sluggish downstream cotton yarn market, cotton sales are far less than in previous years. In the face of foreign Khmer cotton prices, there is limited room for domestic cotton prices to fall, and the contradiction between high prices and low sales is difficult to resolve for a while.
International cotton prices have been rising for some time.
Since the low of 50 cents per pound in April 2020, the price of cotton futures in New York has nearly tripled in two years and is currently hovering at 145 cents per pound, up about 30% from the end of 2021. And this is also the 11-year high of international cotton prices.
There are various reasons behind the crazy cotton prices.
In Texas, the world's main cotton producing region, extreme drought is visiting. In line with international cotton prices, the range of extreme drought in Texas is also the highest in 11 years, and the drought situation is likely to get worse.
Cotton was widely abandoned in Texas due to scant rainfall. As a producing region that accounts for half of the total U.S. production, Texas' cotton harvest is pivotal. According to the forecast of the US Department of Agriculture, the abandonment rate of US cotton this year has more than doubled year-on-year, and the output has decreased significantly.
At the same time, clothing consumption has rebounded after the epidemic, and the supply of raw cotton has strengthened; due to the food shortage caused by the Ukraine crisis, the United States is expected to reduce cotton planting and increase soybean planting is also further pushing up the market.
The United States is the world's largest cotton exporter, accounting for one-third of global cotton exports. In India, the world's second cotton producer and third exporter, the cotton market here has also undergone new changes recently.
Due to the sluggish domestic cotton production in India, the prices of seed cotton and lint cotton have risen all the way to record highs, and the inflation of clothing and other items has been serious. In order to curb the rise in local cotton prices, the local textile association advised the government to stop exporting. India's largest cotton exporter Kotak has also announced that it will stop exporting cotton to China.
At present, India has shown signs of increasing overseas purchases to make up for domestic supply shortages-the Indian government announced in April that import duties on cotton would be lifted by the end of September.
The United States faces a poor harvest and India reduces exports. It is expected that international cotton prices will remain high in the short term. The World Bank also said in its report recently that cotton prices are expected to rise by nearly 40% in 2022, before falling back 6% in 2023 as weather conditions improve.