Cotton farmers, buyers deadlocked over price

lowest grade while farmers are demanding as much as US50c per kg, one of the negotiators, who asked not to be named, said in an interview last Friday.
“Nothing has been agreed and later today (Friday) we will be meeting the Government to seek guidance,” a negotiator representing buyers said.
The price being offered by ginners is 180 percent less than farmers were paid for the lowest grade at the start of the 2011 marketing season.
Cotton Marketing and Technical Committee chairman Mr Beream Mukwende said the negotiations were still ongoing but could not give details.
CMTC is comprised of cotton farmers, ginners, oil expressers, the clothing and textile industry and the Agricultural Marketing Authority.
Analysts said on Friday the cotton price outlook for 2012 is bearish due to increased global production combined with limited demand.
The global production rose 16 percent to 27,1 million tonnes due to high prices obtained last season, according to Cotton Outlook figures.
“Consumption is forecast to rise by 5 percent hence cotton stocks will be plentiful and this will depress prices,” said an independent commodity analyst.
“Scenario for 2012 oppose that of 2011 in that cotton stocks are high against limited demand whereas in 2011 production could not nearly match supply. Stocks to use ratio is a key measure of the availability of a crop hence its price potential. Stocks to use ratio for cotton in 2011 hovered around 35 percent and for 2012 (45- 55 percent).
“The greater the stocks to use ratio the lesser the price, (and), the lesser the stocks to use ratio the higher the prices.
Another analyst said: “It’s a scenario where we have better harvests combined with low demand and this puts pressure on prices.”
This time last year, the Liverpool A index, normally used by ginners to determine local price, was US230,17 per pound and current price is US99,46c per pound, representing a decline of 57 percent.
Cotton Ginners’ Association director-general Mr Godfrey Buka did not comment last Friday, referring questions to Mr Mukwende, who is also the second vice president of the Zimbabwe Farmers’ Union.