Trade disputes may impact world cotton prices | Garment Industry News

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Global production for 2020/21 is estimated at 24.6 million tonnes, led by India, while global consumption is forecast at 25 million tonnes, led by China

Global cotton prices could be influenced by more than traditional market fundamentals in the 2020/21 season, as trade disputes between major players continue and US restrictions on Xinjiang cotton could strain them. global supply chains and their lack of transparency.

Traditional market “fundamentals” are some of the factors that have proven to be fairly consistent predictors of market behavior over time, says the International Cotton Advisory Committee (ICAC) in its latest update.

However, he adds that these are by no means a guarantee of short-term price movements, as other factors can take the market away from what the fundamentals might seem to indicate.

“Today the industry finds itself in this very situation. If, as expected, world cotton production in 2020/21 (estimated at 24.6 million tonnes) is unable to keep pace with world consumption (estimated at 25 million tonnes) and trade world remains healthy (estimated at 9.8 million tonnes), this combination of factors should normally lead to higher prices.

“However, ongoing trade tensions between the United States and China are likely to continue to impact prices, and the recently announced United States restriction on cotton from Xinjiang – which produces about 90% of cotton. fiber from China every year – also complicates the outlook. If fully implemented, the restriction would place a very difficult burden of proof on companies throughout the long and complex cotton supply chain. “

In terms of prices, the Secretariat’s current projection for the 2019/20 A-Index year-end average has been revised to 80 cents per pound this month.

The price projection for the A-Index 2020/21 year-end average is 89.7 cents per pound this month.

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