Page 18 - TEXtalks International May/June 2022

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Cotton Prices not expected to

come back soon; India to

temporarily suspend exports

Cotton prices have soared to their highest levels Spot quotations averaged 483 points lower than the
since May 2011 as concerns grow over a possible previous week, according to the USDA. The weekly
export ban by top exporters and a severe drought average was down from 142.30 cents last week, but
hitting the cotton yields. A rally in cotton futures up from 78.50 cents reported in the corresponding
accelerated in New York from late April, with bench- period a year ago. Daily average quotations ranged
mark front-month contract prices climbing to 155.95 from a high of 140.16 cents Wednesday, May 25 to a
cents per pound at one point this month, up roughly low of 135.61 cents Thursday, May 26. In Pakistan,
10% from a month earlier and roughly 30% from the severe environmental conditions are threatening the
end of 2021. With prices not expected to come back cotton output. Though cotton thrives in hot and dry
down for some time, apparel makers face the climates, excessive heat reduces both the quantity
prospect of persistently higher costs, which could and quality of harvests. Moreover, the plants
exacerbate the commodities-driven inflation that is become more susceptible to white-fly and other
already plaguing much of the global economy. The pests. Pakistan is facing such issues and China has
jump was triggered by reports that India, which decided to help Pakistan with cotton seeds to
accounts for more than 10% of global cotton increase the yield. Xinjiang and Pakistan are
exports, could temporarily suspend exports. Global adjacent to each other and have similar natural
prices surged 70% over the period, scaling the conditions. The weather update of Punjab suggests
highest since 2011 in May, with analysts predicting rains in June which might favor the cotton yield in
more gains amid drought damage to output in top the country.
exporters the United States, and a recovery in
China's demand as COVID-19 curbs ease. Meanwhile, cotton inventories have fallen unusually
low as transportation companies grapple with labor
Conditions in the US may make matters worse as shortages. Exchange inventories, which usually
persistently dry weather threatens to hit yields in the number in the tens of thousands of roughly 225 kg
world's top cotton-producing country. Similarly, bales, were as low as 1,101 bales early last month.
according to the latest update of the International While more cotton is set to come from Brazil and
Cotton Advisory Committee (ICAC), a decrease in the elsewhere in South America from spring on, poor
crop size of some top cotton-producing countries, weather and a shortage of shipping capacity have
including India, Argentina, and South Africa, has limited their supply. Conditions in the United States
resulted in consumption outpacing production as the may make matters worse as persistently dry weather
2021/22 season comes to a close. They were closely threatens to hit yields in the world's top cotton
aligned through most of the year but given these producing country. Whereas on the other hand, the
smaller-than-expected crops, consumption is Cotton planting in India, the world's biggest
expected to exceed production by about 265,000 producer of fiber, could jump as much as 15% in
tonnes. Furthermore, the global area is estimated to 2022 to an all-time high, as the strong prices prompt
decrease by 1% to 32.78 million hectares and the farmers to switch away from other crops. A 15% rise
global production is projected to be 26.13 million in India's cotton crop area would lift it to around 13.8
tonnes this season. However, the global consumption million hectares in 2022 from 12 million hectares of
season is currently projected at 26.09 million tonnes. the last year.

May/June 2022