The world cotton market goes into a stage of oversupply

30.05.2017

The increase of the demand on the global cotton market is due to growth of volume of harvest in several countries, and also due to sales of strategic stocks of cotton in China

Good weather can lead to an increase of the cotton crop in this agricultural year, which, in turn, will cause excess supply and reduce the cost of the material, experts say. The cotton futures on the Intercontinental exchange since the beginning of the month on may 26 fell to 7.7% – to for 72.79 cents per pound.

If the price of cotton until the end of may will not recover, it will be the first monthly depreciation of the material since December, according to Bloomberg.

It is expected that the US, the largest exporter of cotton in the world, will increase the harvest in the next year to a record over the last 10 years volume of 4.1 million tons. The formation of excess also contributes to the fact that China (the largest consumer) has launched the sale of its strategic stocks of cotton, thereby reducing import fibre from other countries.

But the situation may change if China decides to increase the import quotas for high-quality cotton for textile mills, said the chief economist of research company Cotton Inc. John Devin. At the same time Rutherford has warned that the decline in cotton production may be the case if the weather will give the farmers another surprise.


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