Is the international cotton price going up or down next year?
Recently, there has been a small rebound in international cotton prices, in part because the growth of covid-19 cases has started to slow, especially in Europe, but all of this has happened at a very slow pace.
Yet growth is picking up in the United States and Asia, and there are signs of deterioration in Africa. With poor health care and poor testing, the continent could become a ticking time bomb unless drastic action is taken. The market should be concerned about the disease in Asia and its impact on the production of spinning, weaving and clothing. These factories have large Numbers of workers who have been laid off and have no support from the west. Now that the world's largest retailers are cancelling orders, demanding lower prices and better payment terms, the region's textile production is at risk of systemic problems.
Based on last week's USDA supply and demand forecasts, global consumption fell by 7.5m bales in 209/20, a cut that was expected, but is widely expected to be lower and forecasts for future cotton consumption will be revised down further as long as the blockade around the world continues.
Looking at the country's new annual production situation, the United States department of agriculture expects this year's planting area to be about the same as last year. Still, given the historical average yield per unit area and the rate of abandonment, this year's us cotton production could easily reach 23m bales, or 5m tonnes, under normal weather conditions. Even if the bad weather leads to production cuts, just 15 million bales of U.S. cotton will put a lot of pressure on cotton prices, given the current gap in global cotton consumption.
At present, the Brazilian cotton has been sown, is still very high level, there is no doubt. Indian cotton farmers have received strong support from the CCI this year. Strong demand in the local market will keep cotton production stable despite the slump in international cotton prices. In west Africa, where it is an election year in many places and governments want to support farmers with firm farm prices, cotton remains a stable cash crop with few alternatives.
In short, global cotton production will not be hit as hard as consumption in 2020, which raises the question of where all this cotton will go and have a knock-on effect on prices.