The current level of cotton prices may be compared to prices from the period of February – July 1995. In those times, a little smaller world cotton supply which was caused by the tendency of keeping great cotton stocks at the greatest producers’ and consumers’ give rise to intensive speculative actions, which made cotton prices rise to the level of 115-120 UScents/lb.
After the speculation ended, cotton prices relatively quickly (in August 1995) lowered to the level of ca. 90 UScents/lb – it means before cotton from the new crop entered the market.
In Europe, cotton from the USA, Australia, Brazil, Turkey and others with the delivery “to the mill” was offered in the prices even higher than 120 UScents/lb. The cheapest cotton varieties in Poland then were those from Uzbekistan and Turkmenistan, imported due to barter transactions practised in those time. Prices of those cottons were considerably lower when compared to other varieties.
Contrary to 1995, the present pricing situation follows from a real shortage of cotton on world markets. In Europe, the real cotton prices (CIF-North Europe) with a short delivery period, right now are at the level of 114-117 UScents/lb. One can assume that in the light of growing cotton consumption and limited possibilities of its production increase, deliveries from new crop (October-November) will cause an insignificant lowering of prices, or maybe they only hinder their further rise. The situation will depend on China and India decisions about the volume of cotton stocks in those countries, to a great extent.
Andrzej Drożdż
The Gdynia Cotton Association