Lcotton on the side. He never ceases to appreciate himself. As proof, the pound of natural white fiber is trading at more than 1.1 dollars (0.95 euros). We have to go back in time to 2011 to get back to such a price level. Since January, the increase has exceeded 40%. No doubt, the price of cotton is racing.
The rebound is all the more spectacular in that when the crisis due to Covid-19 broke out, the natural fiber was falling apart. Its price had fallen, in April 2020, below the bar of 50 cents per pound. Closure of shops and shopping centers, less renewal of the wardrobe, the clothing market has slowed down with the containment measures. As a result, cotton consumption fell by 12% during the 2019-2020 season.
The return of customers to stores, along with the restarting of textile factories and spinning mills in China, Vietnam, India, Pakistan and Bangladesh, has boosted demand for supplies. Not to mention that China, which overtook the other countries during the restart, has started to shop for cotton with a vengeance. However, if the former Middle Kingdom disputes India for the title of the largest supplier of cotton in the world, it is also the leading importer.
The thread of speculation
In this context of buying fever, climatic hazards limited Indian and Chinese production. Result, after a first deficit between production and global consumption over the period 2020-2021, a second deficit is expected for the current season, which will end in mid-2022, with a volume of fiber bales estimated at 25.7 million. tons. Even if the warehouses are not short of merchandise, these elements are scrutinized by investors. They are also keeping a close eye on American production. Here again, the weather took its toll and the planters had to delay the harvest.
The fate of cotton is played out against this cyclical backdrop. But also on the green carpet of the geopolitical stakes with in filigree the Sino-American showdown. Indeed, in 2020, Donald Trump decided to ban all imports of Chinese cotton clothing made in the Chinese province of Xinjiang, a major supplier of cotton but boycotted by major brands and the US government to protest against forced labor by the Uyghur minority. Accusations denied by Beijing, ready to draw boycott actions of store signs and brands in a position of retaliation.
But the American embargo does not apply if the cotton for Chinese clothing is made in the USA … Hence the massive flow of imports of American fiber through China. Especially since Beijing had also committed, in early 2020, to increase its purchases of American goods. To complete the picture, all that remains is to pull the thread of speculation. The flow of money spilled to support economies in times of pandemic is helping to drive up commodity prices. And cotton is an absorbent material …
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“Left in distaff during the Covid-19 crisis, the price of cotton is racing”