The coming season looks like a promising one for cotton farmers, with high cotton prices expected to continue through the 2021/22 season, the International Cotton Advisory Committee (ICAC) says in its latest update.
However, it notes prices are a double-edged sword. Higher-income for farmers is a good thing and it could drive them to increase the global acreage under cotton but those costs are usually passed along the supply chain, which makes cotton less competitive against other fibres.
While mill use is expected to remain robust throughout 2021/22, global stocks are believed to be sufficient to meet the demand. At the end of the 2020/21 season, global stocks are estimated at 20.35m tonnes.
The secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 91 cents to 119 cents, with a midpoint at 103.29 cents per pound.
Last month, the ICAC said global cotton production is poised to show a 6% year-over-year increase versus 2020/21, with the surge led by three of the world’s top five producers — US, Brazil, and Pakistan.