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China, India play key role in future cotton prices

China is the world's largest user and second largest producer of cotton. That country’s actions relating to stocks and imports could be an overwhelming factor on improvement of cotton prices. China holds 60 per cent of the world’s cotton stocks, cotton leftover from previous years. Their policies affect how cotton is used, the way it’s moved into the supply chain and when it will have a big impact.

Also, a significant development is the monsoon season in India, the world’s largest cotton producer. The Indian government has forecast monsoon deficit, meaning the country’s cotton crop estimate could be lowered. India’s expected decrease in cotton production could be another factor in the direction that prices take in future months.

Cotton farmers prefer to see prices reach the 80 cent plateau, a mark not seen since June 2014. The US Department of Agriculture will release its estimate of actual cotton acreage planted in the US on June 30. Some years, when cotton prices are low, everything else is low. Then farmers just stick with cotton. Some years when cotton prices are low, other commodities, like corn and soybeans, are a lot better. Farmers shift some acres out from cotton and in to those other crops. That’s what has happened this year.

 
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