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

Traditional market ‘fundamentals’ are certain factors that have proven themselves over time to be fairly consistent predictors of marketplace behaviour, the International Cotton Advisory Committee (ICAC) says in its latest update.

However, it adds these are by no means a guarantee of near-term price fluctuations because other factors can push the market away from what the fundamentals might appear to indicate.

“Today the industry finds itself in that very situation. If, as expected, global cotton production in 2020/21 (estimated at 24.6m tonnes) is unable to keep pace with global consumption (estimated at 25m tonnes) and worldwide trade remains healthy (estimated at 9.8m tonnes), that combination of factors normally would be expected to drive an increase in price.

“However, ongoing trade tensions between the USA and China likely will continue to have an impact on prices, and the recently announced US restriction on cotton from Xinjiang — which produces about 90% of China’s cotton lint each year — complicates the outlook as well. If fully enforced, the restriction would place a very difficult burden of proof on companies throughout the long and complex cotton supply chain.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

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

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