Cotton futures have been trading around 85 cents per pound since November amid weak demand, especially from the three largest consumers China, India, and Pakistan.
Cotton prices soared in the first four months of 2022 to hit an eleven-year high of 156 per pound in April as a pandemic-related increase in demand came together with unfavorable weather conditions in growing areas in the US, high energy and fertilizers prices, and lower exports from Malaysia, Brazil, and India.
However, prices have been falling since then and are now 45% below the April peak, pushing the 2022 loss to 25%. The US Department of Agriculture recently estimated global cotton consumption at its 2nd lowest level in nearly a decade in 2022/2023, pressured down by lower profit margins for spinning mills, falling yarn orders from fabric and apparel companies, and higher inflation levels. On the production side, global stocks are seen up, and global trade down by roughly 1 million bales, led by a decline in China.
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