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World cotton prices fluctuate

World cotton prices continued their see-saw ride in May, falling almost three per cent in the month following a more than four per cent increase in April that occurred after a two per cent decline in March. So far, this year prices have risen by about seven per cent though remain 22 per cent below year ago levels.

The seven-market US average cotton spot price dropped by almost two cents per pound. However, it is unclear why prices moved, since estimates for supply and demand for the current crop year were nearly unchanged in the month. World cotton stocks are projected to increase 8.2 per cent in the current season. Global cotton mill use for 2014-15, on the other hand, is forecast to rise by two per cent above last year.

Although China has started releasing large portions of their cotton reserves it stockpiled during the buying program for several years to support prices, the expected increase in demand for cotton by Chinese mills has not yet materialised. The country is expected to import 7.7 million bales of cotton in the current crop year, over half last year’s level.

Government policy in China combined with a slowdown in global demand for cotton has resulted in increases in cotton stocks in China and many other countries, which will continue to put downward pressure on prices.

 
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