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US cotton prices under pressure

Currency depreciation in Turkey, Brazil and India has put pressure on US cotton prices. But if the currencies move in a different direction demand could increase. China isn’t buying as much cotton as it was before the tariffs but is still purchasing US cotton. The textile process has moved to Southeast Asia, a growing market for US cotton. Vietnam is the largest consumer of US cotton.

Cambodia, Thailand, Indonesia are also significant consumers. The price competition between polyester and cotton has shifted toward cotton. This was led by China cracking down on polyester manufacturing facilities because of water and air pollution. Additionally, consumers are again expressing a desire to return to the comfort offered by cotton.

A counter-cyclical tariff on cotton by Turkey could disrupt some established trade flows, but the critical shortage of US quality cotton this year and the next would mean that the solid Turkish market honed out by US merchants and cooperatives would shift to other export locations and US export volume would not be hurt. Simply, Turkey would end up paying more for cotton than it currently does. Demand for US cotton – already one of the cheaper growths in the world – will do nothing but boom.

 
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