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Current high cotton prices will likely continue

In the Industry | December 13, 2021 | By:

by Seshadri Ramkumar

Strong cotton demand continues to drive its highest price in a decade. At the recent 79th plenary session, “Fortifying the Cotton Supply Chain: New Approaches to New Challenges,” of the International Cotton Advisory Committee (ICAC), this was an important topic of discussion. Matthew Looney, ICAC data scientist says that while it is likely that cotton prices will maintain through 2022, it is unlikely that prices will go beyond the current higher levels. 

With production higher in the U.S. and Brazil, stocks are available to satisfy the demand going into 2022. Demand will continue and likely grow with the holiday season, but supply chain bottlenecks and the emergence of the COVID-19 Omicron variant may ultimately affect consumer buying. “If we have demand increase, stock will be there,” says Looney. 

A veteran cotton purchaser for a major textile mill in India reports that mills are expecting a leveling of cotton prices and are cautiously buying cotton for, perhaps, 10-day production needs and hoping that new arrivals will bring down the price in India.

“Prices cannot remain high,” says Lorena Ruiz, ICAC economist. “When prices crossed the 90 cents range in previous seasons, prices came down in the following seasons,” she adds. 

Countries such as Vietnam and Bangladesh have increased textile manufacturing and hence the demand for cotton, and while demand is still driving the price, given the stock levels, prices will remain steady. However, it is not possible to predict precisely how prices may trend given the supply-demand situation. 

Dr. Seshadri Ramkumar, Ph.D., is professor, Nonwovens & Advanced Materials Laboratory, Texas Tech University. 

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