Good hopes for the upcoming Fiscal Year 2021-22 as according to a report published by Fitch Solutions, Cotton production is predicted to go up to 5.
3 million bales when compared with the current Fiscal year in which the yield is 4.5 million bales. In spite of, Pakistan’s officials were expecting a 5.645 million bales in the current fiscal year as well.
However, Fitch Solutions said that “bad weather in the US and low prices at the time of plantings will lead to a 4.9 percent decline in global cotton production in 2020-21.”
Moreover, another factor has also been identified by Fitch that is a cause for the decline of a whopping 13.4% in cotton consumption in 2020 is the economic recession and lockdowns caused by Covid-19.
However, it expects consumption to rebound in 2021, by 12.7 percent on a year-on-year basis while absolute consumption to fully recover by 2022.
Commenting on prices, the report said, “We expect prices to average at an elevated USc87.0/lb in 2021, compared with the year-to-date average of USc85.2/lb. This forecast suggests that prices would average at their highest level since 2011.
We see prices remaining elevated in the coming quarters as supply is tight amid the robust Covid-19 economic recovery and a strong pick-up in demand in 2021. We see prices trading in the USc80-100/lb range in the coming months. We see strong resistance at the USc100/lb level, last reached in February 2021.”
