After stabilizing and rising a bit in October, cotton prices fell again in November, according to the U.S. Department of Agriculture. The seven-market U.S. average cotton spot price declined from $0.635 per pound to $0.587 during the month, the first time it has fallen below $0.60 per pound in more than five years.
Though demand for cotton apparel is being revived by the low prices, there still remains tremendous downward price pressure from the worldwide cotton glut.
China, the biggest supplier of the world’s apparel and the largest user of cotton, has begun to release large portions of fiber reserves accumulated during the buying program it implemented to support prices. In September, the Chinese government stopped buying cotton from farmers for national reserves, opting instead to give direct subsidies to farmers, and to reduce cotton import quotas in order to stimulate demand for domestic fiber.
The latest USDA cotton projections for 2014/15 indicate that world ending stocks are expected to rise for the fifth consecutive season to a record 107.1 million bales.
However, while stocks are projected at a record, the 2014/15 growth rate is forecast to slow significantly due to an expected continued rebound in demand.
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