The ongoing drought in the central regions of the United States has pushed cotton prices to their highest levels in more than a decade.
The plant fiber has traded as much as $1.3171 a pound since the start of the week, according to the leading US futures contract — up 7 percent from the previous day and nearly 50 percent from mid-September. A higher rate was last recorded in July 2011.
Around 40 percent of US cotton is produced in Northwest Texas, which has experienced an exceptional lack of rainfall since early January. Depending on the region, the cotton is planted from March to June. “So the crop volume will be very uncertain,” said cotton specialist and professor at Texas A&M University John Robinson. Many are already comparing the current weather conditions to the 2011 drought – the worst the US cotton industry has ever experienced.
At the time, cotton prices had risen to as much as $2.27 a pound. The drought hits an already battered market as demand for cotton textiles has increased due to the pandemic and people spending more time at home. In addition, China, by far the world’s largest producer and importer of cotton, has increased its demand. The US produces about 17 percent of global cotton.
In addition, the price of pesticides used in cotton cultivation has skyrocketed. The reason for this is the rise in the price of crude oil, from which the pesticides are extracted.
While high cotton prices could actually lead to a significant increase in acreage in the US, the cost of pesticides should limit that growth, Arlan Suderman of broker StoneX told public broadcaster PBS’ local Iowa station.
According to John Robinson, a wave of speculative buying is also driving the rise in cotton prices. “The dynamics are similar to many commodities,” summarized Arlan Suderman, referring to speculators. (AFP)
This translated post previously appeared on FashionUnited.fr.