Volatility may hit local cotton trade

18 December 2018

Charles Clack (RaboBank), The Land
18 December 2018

EXCEPTIONAL price strength, both at home and abroad, has been a mainstay of the global cotton market in recent seasons — with US futures trading well above five-year average price levels, while Australian cash prices have regularly touched $600/bale.

Speculation, drought and trade have all played their part in this market strength, but exceptional global consumption growth has undoubtedly been the largest contributor.

The world has been demanding more cotton —three per cent more in 2016/17 and a staggering six per cent more in 2017/18 — with South East Asian buyers leading the charge.

The 2018/19 season has been forecast to bring a more modest three per cent increase in world consumption growth.

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