Global cotton prices are rising. The trigger for the welcome price rise has emanated from the definite signs of easing in the ongoing trade tensions between the US and China. After protracted negotiations between the two warring sides, there are signs of some kind of reconciliation, even if partial. This is seen as giving a bit of a boost to all commodities in general.
While the US is the world’s largest exporter of cotton, the Asian major is the largest importer. As the world’s largest consumer, China builds stocks from time to time. In recent years, it has been destocking, and now there is greater conviction in the market that the destocking cycle has ended and restocking will begin. China is reported to have purchased some cotton recently.
A combination of plentiful supplies, modest demand growth and large inventory will not let the market run amok. At the same time, as and when the trade conflict shows more concrete signs of easing, there will be a pickup in export trade which in turn will boost prices. Once the market begins to move upwards, speculative capital is sure to move in and exert an exaggerated impact. Some Indian exporters are reported to have concluded a few export deals with China, apart from regular buyers such as Bangladesh.