adminWith a number of factors combining, cotton prices spiked to historic highs in 2010 and led to a number of investors jumping in on the trend, only for the price to start tumbling midway last year.
Locally, at the beginning of the 2011 cotton selling season minimum price was pegged at $0,85 but later revised to $0,45.
A Cotlook index report reveals that the euro crisis also contributed to the decrease of cotton price.
“With prices now sitting at 87,42 cents per pound, cotton has been mauled by a decrease of nearly 35 percent from its mid-year (2011) highs.
“Not only that, but prices are now sitting at a 15-month low, as euro drama and shaky markets have combined with high stockpiles to bring this commodity back down to earth,” the report says.
The report said global consumption for last year was expected to surge, but unfortunately, the projected 120 million tonnes of cotton use was revised down to 113 million after issues in China and Pakistan led to lower demand.
“As the need for cotton began to cool down, supplies ramped up all over the world, putting downward pressure on prices,” the index reports.
The price decrease is likely to affect local cotton producers since prices are determined on the international market and in recent years this has resulted in serious squabbles between growers and buyers. — New Ziana.
Online Reporter