Cotton Prices Rise 9 Percent in April

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machine working in cotton harvest in brazil

Cotton prices have increased by more than 6 cents per pound so far in 2017, or about 9 percent, according to data from the U.S. Department of Agriculture (USDA).

The seven-market U.S. average cotton spot price, which ended 2016 at just above 69 cents per pound, has increased gradually during the first four months of the year, to 75.66 cents.

With the exception of a brief spike last August that was due to tight supplies in India and Pakistan as a result of drought conditions there, cotton prices are now at their highest level in more than two and a half years.

This steady increase has been a surprise, since cotton supplies were expected to loosen by now, helped by what seems like monthly increases to the harvest forecast. In April, larger USDA crop estimates for China and Brazil helped drive the global harvest estimate up by almost 600k bales.

And while mill-use forecasts were also adjusted upward, the increase was only 160k bales higher, widening the gap between harvest and mill-use, with ending stocks expected higher than they were last month.

Supply was reportedly greater than demand during the recent sale of China’s cotton reserves that began on March 6. Although some spinners were wary of fiber that has been warehoused for many years, others apparently found the prices attractive enough to take the risk.

A significant jump in demand for U.S. cotton due to availability, quality and price has resulted in an uptick in exports. Whether or not the country is able to maintain this high level of imports remains to be seen.

 


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