Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Cotton prices - will they fall further in 2013?

Twitter Linkedin eCard

Cotton futures endured a poor 2012, declining 18%, making the fibre one of the worst performers in the agricultural commodities complex.

Prices were sapped by the building up of world inventories to what is expected to be a record high at the close of 2012-13.

Chinese continued policy of offering farmers a relatively high minimum price for the fibre, even after stockpiling huge amounts of the fibre in 2011-12, muffled signals to producers of the rise in stocks.

Will farmers get the message in 2013? And what will this mean for prices?


"State cotton purchases in China at double the global market price are supporting domestic prices and should replenish stocks in China to a full year's consumption. Array

Q1 2013: 75 cents a pound

Q2 2013: 75 cents a pound

Q3 2013: 77 cents a pound

Q4 2013: 80 cents a pound

2013 average: 77 cents a pound

Forecast for quarter-average price, New York front futures contract

"China's competitors in the cotton processing industry such as Pakistan, Vietnam, India, Bangladesh and Thailand could increase their shares of the market. Their higher requirements of raw cotton could make up for a part of China's lower imports.

"All in all, the upside price potential is limited in the medium term. That said, a marked reduction of acreage in favour of soybeans is to be expected for the 2013-14 season, given the continued poor performance of cotton prices.

"A much lower supply of cotton could then result in a market deficit for the first time in four years. This should give moderate lift to prices, despite high stocks."

Morgan Stanley

"We remain bullish cotton prices relative to the market, predicting an average price of 80 cents a pound for the 2012-13 marketing year. Array

2012-13: 80 cents a pound

Forecast for season-average price, New York front futures contract

"New-crop supply uncertainties will increasingly drive prices as the market focus moves away from a year of good production in the northern hemisphere. Cotton acreage is likely to decline at least 30% year on year in Brazil and Australia in 2012-13.

"China's import demand has largely driven US export sales since the start of the country's 2012-13 reserve purchasing programme in September.

"As China's government continues to scoop up domestic supplies at a minimum support price of 90 cents a pound, industrial users will likely rely more on imports through the end of the marketing year."


"Global cotton prices are forecast to plateau in the first half of 2013 as the market faces its largest ever period of oversupply, before the curve lifts modestly by year end. Array

Q1 2013: 65 cents a pound

Q2 2013: 65 cents a pound

Q3 2013: 70 cents a pound

Q4 2013: 70 cents a pound

Forecast for quarter-average price, New York front futures contract

"Global cotton area harvested is expected to contract 6% in 2012-13 and a further 9% in 2013-14. However, this is not substantial enough to limit production and erode ending stocks.

"We anticipate that domestic price support schemes and government purchasing in China and India will limit the extent of area downgrades in cotton crops – limiting the market's ability to force a much-needed widespread reduction in production and erosion of ending stocks.

"Supply pressures continue to drive our neutral-to-bearish cotton price forecast, while ongoing macroeconomic uncertainties will weigh on the cotton market due to its discretionary nature during 2013.

"However, with around 46% of global ending stocks located in China, the policies and interventions of the Chinese government remain the wild card for cotton prices."


Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures gain, cotton prices jump on US data

Initial USDA forecasts for crop supply and demand for 2018-19 lift soy and cotton prices, but are not so well received in the cotton market

Cotton prices to tumble in 2018-19, despite surge in Chinese imports

The USDA, in its first extended full world cotton forecasts for 2018-19, also sees drought hurting US output. But US exports will hit a 13-year high

Demand for US soybeans, soymeal tumbles, as prices soar

US export sales of soymeal hit a 2017-18 low, and those of soybeans turn negative. But in cotton, buyers step in as prices fall

Evening markets: Argentine moisture slips up soymeal rally. But weather revives wheat

Meal futures dip, a little, for the first time in 12 sessions. But wheat futures gain, as drought spreads in Kansas, and cold reaches Europe
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069