The global demand for cotton next year is expected to inch up three per cent over this year as yarn-spinning mills in Bangladesh and Vietnam up their production and China continues on a steady course as the world’s largest textile manufacturer, the USDA reports.
In the last four years, global demand has grown between 1.o per cent and 1.5 per cent a year.
With supply outpacing demand, cotton prices are expected to remain at around the 70-cents-a-pound mark in the near future and perhaps fall later in the year.
Last year, cotton went as high as 82 cents a pound. “In the last couple of years, prices have remained softer,” said Karin Malmstrom, director, Cotton Council International, for China and Northeast Asia, who recently gave a webinar on the cotton supply-chain situation.
“Since last year, the prices have remained firm, which is not a bad thing. In the last few years, the cotton market had a huge roller coaster, which makes it hard to plan and make commitments.”
China, the world’s largest cotton consumer and the second-largest cotton producer, has gradually been selling off its huge stock of cotton it started warehousing in 2011 to support its farmers with premium prices.
At that time, world cotton prices eventually hit $2.27 a pound, the highest it had been since the US Civil War.
But cotton can’t be hoarded forever because it starts to deteriorate after a few years. So in late 2013, China started selling off its vast reserves, which peaked at 68 million bales and is now down to about 40 million bales, but that is still about twice the annual production seen in the United States.
“We see this as a stabilizing factor,” Malmstrom said. “In the past, we’ve had two different balance sheets—one for China and one for the rest of the world. In the next couple of years, we may be working off of one balance sheet.”
Source: www.thefinancialexpress-bd.com