Cotton prices plummet
Cotton market information resource Cotlook has said in its market report for September that international cotton prices “reversed direction in dramatic fashion” during the month.
It said that, influenced by macro-economic headwinds and a weak demand situation, prices declined by more than 20% from the end of August to the end of September. “Demand destruction [is] emerging across the globe as a result of macro-economic factors,” Cotlook said.
It also pointed out that, with prices sinking so quickly, another problem in the market is that growers may now find buyers reluctant to “execute high-priced contracts arranged earlier in the year”.
There are threats of default, the market report made clear, because spinners are now expected to take delivery of substantial volumes of cotton purchased at levels much higher than those in force today, at a time when the outlook for demand seems “far more promising”.
