Financial crisis has dictated the direction of raw cotton prices

The global financial crisis has dictated the direction of raw cotton prices last weeks. New York December futures are18 percent lower than a month earlier and 25 percent less than in August. The Cotlook A Index has fallen by 17 percent  since August. Moreover, the strengthening of the US dollar has exacerbated the cheapening of asking rates at various origins, including India and Pakistan.

Cotton yarn values have responded to the further sharp de-cline in raw cotton values, with offers in most parts of the world moving downward this week. The Cotlook Yarn Index has fallen to its lowest level since February. Despite the discounting of prices, little evidence is discernible of yarn business picking up around the world. The running of textile businesses has also been complicated because of currencies in several of the major producing and exporting countries have depreciated against the US dollar.  For example, sales from India were stimulated by a new decrease in the Indian rupee which lost 8.4% against the US dollar in September and 18% over the first seven months of the year. The rupee fell 15% against the euro.