International Cotton Advisory Committee (ICAC) has informed through a recent press release that a decrease in cotton price is highly unlikely during the 2021-2022 season. The news is bitter for the textile sector; however, the report has highlighted that an increase in cotton prices is also not expected. The stable cotton prices give benefits to the sector to calculate the product costing and profit margins.
On the other hand, it is good news for farmers. The coming season looks promising for cotton farmers, with high prices expected to continue through the 2021/22 season. That is a good thing, but prices are a double-edged sword. Better profit for farmers is a good thing, and it could drive them to increase the global acreage under cotton. However, those costs are usually passed along the supply chain, making cotton less competitive against other fibers.
Cotton This Month Report presented the following summary:
• The international reference price of cotton has risen dramatically during the 2020/21 season and continues its rise into the 2021/22 season
• Cotton prices are the highest they have been in a decade
• Secretariat does not expect cotton prices to rise much higher than they are now, and it is highly unlikely that prices will reach the levels seen during the 2010/11 season
Prices are expected to be volatile through the remainder of the 2021/22 season, but it is unlikely they will climb much higher than the current point. The ICAC Secretariat does not expect prices or volatility to reach those of the infamous 2010/11 season when prices ascended to 243.65 cents per pound. The Secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 91 cents to 119 cents, with a midpoint at 103.29 cents per pound.
Cotton is the most important commodity in the textile industry. If the producers continue to experience an escalation in cotton prices, adversely affecting the garment and textile industries. Various factors cause cotton prices to go up, chief among these being a shortage of raw material. Although a rise in cotton prices is advantageous for farmers, the textile manufacturing industry bears the brunt of the effects. For the cotton importers and textile exporters of Pakistan, it is a piece of good news that stable prices are expected.
