Said to be the worst since 75 years, financial crisis and the world economy slow-down accompanying it have a clear, negative impact on the world textile industry, including the cotton sector which encompasses both the production and processing of fibre.
After a slight drop in world cotton production in 2007/08, we witness its significant decrease in 2008/09
Cotton production will go down as much as by 6% and will be ca. 24,5 mln tonnes. Within two last seasons, growing area decreased by almost 6%, down to ca. 31,3 mln hectares. It is estimated that this season, the yield will be ca.785 kg/ha and this high level of yield shall be due to a dynamically growing share of GM cotton production.
After years of growth, two last seasons are the drop of world cotton consumption
In the five months of the current 2008/09 season, the cotton consumption in world has been decreasing and it probably will be 24,9 mln tonnes. So, the drop will be by ca. 6%. Main reasons are a weaker buying power of the potential consumers of apparel and textiles, rising costs of textiles’ production in Asia and also, significant obstacles in sourcing credits for raw material purchase, suffered by spinning mills.
Rapid drops in world cotton turnover
The current decrease dynamics (- 12%) leads to the conclusion that in 2008/09 season, both world cotton imports and exports shall have dropped to the level of hardly 7,3 mln tonnes. China share in the world cotton imports, similarly as in the case of consumption, is the greatest and reaches ca. 40%. Since many months, specialised cotton trading companies have been noting a negative impact of speculative activities on the commodity exchanges as well as of the financial crisis on their business. Characteristic example of such situation is ceasing the activities (November 2008) by Weil Brothers & Stern Ltd. Cotton Merchants who were active since ca. 150 years and who were creating the history of cotton market.
Since the beginning of the current season, cotton prices expressed in US dollars were quickly dropping. Within 4 months, cotton quotations dropped by as much as 30%. Currency exchange rates were fluctuating relatively strongly what additionally complicated turnover of cotton and other textile raw materials.