As the year comes to an end, government data shows that the export sales in the US almost quadrupled when compared with the previous year through upland cotton. This gives a boost to the cotton industry due to the demand for supplies from the world’s top exporter, the US. Meanwhile, to fulfill commitments under a trade deal, China is seen boosting purchases as their economy revive.
Looking at the agricultural aspect, The US Department of Agriculture cut its forecast numerous times for the domestic crop due to unfortunate weather condition which includes hurricanes, spoiled supply prospects and droughts. But since April, the cotton futures increased 57% from the lowest in the past 10 years.
“Export demand has held strong despite stay-at-home orders and weaker economies around the world,” Jack Scoville a vice president at Price Futures Group in Chicago, said in an email. “Traders now hope for even more demand later” as coronavirus vaccines are distributed and consumer demand recovers, a Chicago-based director for Plexus Cotton Ltd., said in a report.
Cotton for March delivery rose 1.
3% to 75.79 cents a pound at 12:34 p.m. on ICE Futures US in New York. Last week, the price reached 77.41 cents, the highest for a most-active contract since April 2019. A significant increase in soybean and corn prices signals cotton cropland may decay next year.
Looking at other exporters of Cotton, Brazil, coming on second position has documented a smaller harvest and higher domestic demand.
Meanwhile, Pakistan being a dominant exporter, is boosting purchases after a drop in production.
