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Cotton: waiting for demand to increase

Published on : 10/10/2022 – 00:18

Cotton was the protagonist on Friday 7 October 2022 in Deauville, in the north-west of France, for the traditional meeting of Afcot, the French Cotton Association, which brought together over 300 people from about forty countries, especially African countries. A meeting at a time when the cotton market has entered ” an indescribable fog in the words of a participant.

The big question that agitates the cotton world is when will the demand pick up again. Because she is ” a little bloodless In the words of the president of the French Cotton Association. In front of his 300 guests gathered under the lights of the Deauville casino, Charles Jannet recalled on Friday the particular context of the moment: a terrible drought in Texas – the worst in ten years -, a demand that continues to dry up and prices plummeting a little. ‘more every day.

In the short term, the prospects are therefore dark », Believes the president of Afcot, above all because supply and demand no longer seem to drive prices. As evidence, the announcement of low production in the United States, the world’s largest exporter, did not raise an eyebrow on prices. Macroeconomics has taken over: the energy crisis, runaway inflation and rising interest rates have sidelined market fundamentals.

The spinning mills slow down the pace

The specter of recession has brought down demand for spinning mills, whether in Pakistan, Turkey or Bangladesh, as they themselves face a decline in orders from major textile brands. ” The more adventurous are put off by the specter of wage renegotiations to cope with rising prices “Adds a trader.

But in the minds of traders, even if the decline in prices continues, the context remains particularly on the upside, because production is announced in sharp decline not only in the United States, the leading exporter, but also in Pakistan, which could lose 30% of the its harvest due to second floods Cotton perspectiveweekly dedicated to the market.

Prices collapse, but remain at high levels

Against this backdrop, traders say they are waiting for the horizon to clear, as do exporters who are counting on a price hike. Prices that have fallen but remain historically high. And that’s probably why the atmosphere was anything but gloomy in Deauville. Especially among African producers. ” The lessons are a very acceptable levels says a Chadian representative of the sector, Ibrahim Malloum, especially as cotton sold in dollars benefits from the strength of the US currency.

The current context, however, puts the next campaign into question. ” Who will want to produce cotton in a market where consumption is plummeting and the costs of seeds, inputs, fuel and logistics have at least doubled? asks an actor in the sector.

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