Cotton prices to remain volatile this year


93bab4a586trade[1]NEW YORK (Commodity Online): Even after high expectations of a record production of cotton in 2011, prices are to remain volatile as only about 10% of projected world trade of 8.3m tonnes is still available for purchase at this relatively early stage of the season.
The International Cotton Advisory Committee forecast that a rich pipeline of the fibre was on the way, with world production set to rise by 9% to a record high of 27.3m tonnes (125m bales) in 2011-12.
Growers in Australia and Brazil, both major exporters, are "expanding production substantially", responding to prices which, in New York, hit a record 159.12 cents per pound last month.
However, such output will not begin to become available until April, leaving buyers to compete for now for the mere 830,000 tonnes of supplies for the 2010-11 crop year, which has a further seven months to run, left uncommitted.
Selling patterns had more closely followed the seasonality of supplies, which was seeing the northern hemisphere harvest only now come in earnest to market, ICAC spokesman said to
The extent of the supply squeeze had been exacerbated by the cap on shipments from India, the second-ranked exporter, of 1m tonnes, all of which had been committed.
However, it had been reflected in demand from the US, the top exporter, of which 90% of projected shipments were committed, with the figure 85% from Central Asia, a region which includes Uzbekistan, the third-ranked exporter, Agrimoney reported.
"The scarce uncommitted supply may provide strong pressure on prices and cause increased volatility through the rest of the season," the ICAC said, lifting to 101 cents a pound, from 95 cents a pound, its forecast for average 2010-11 prices as measured by the Cotlook A index.
Another major reason behind the present crunch in supply is because of the devastating flood hit in Queensland and earlier in Pakistan, which damaged a huge amount of crop.