Historically, Cotton futures on ICE reached an all-time high of 227 in March of 2011. And now decreased to nearly 102 cents per pound in Aug of 2022.
Higher production in fabrics and garment segments and slower production in spinning mills encouraged buying as factories feel that cotton yarn will be short-supplied in the current cotton season ending September 2022. Also, the USDA in its July monthly report pointed to lower forecasts for production, exports, and ending stocks in the US for the 2022-23 year amid possible dry weather in Texas. Also, cotton crops in India are under threat of pink bollworm pest, which attacked sooner than expected this year in Punjab and Haryana, due to the scanty rainfall in the early part of the sowing season.
However, cotton is still 35% below the 11-year high of 158 cents/pound hit in May as the global recession is set to cause a decline in demand for non-essential clothing and fabric products.
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