Cotton Prices Explained

As you can see cotton prices are fluctuating. But why is that? And is there a way to predict the price of cotton?

Why are cotton prices fluctuating?

For years, cotton prices maintain their steady and occasional price fluctuation in the market. However, surging contributors get a hand in value variation. These are the top players:

1. Changing Weather Patterns

Cotton production and processing need a large amount of water. According to some experts, it takes 10,000 liters of water for 1-kilogram cotton production. Annually, cotton production needs 250 billion tons of water.

This goal isn’t achievable considering the decades of drought cotton producers are experiencing. Cotton production in Northern Maharashtra, India decreased by 40% over the last 2 years. This low supply affected cotton prices in the market.

2. Energy Inputs

The energy resources needed for cotton production is 68.79%. These are chemical fertilizer and diesel fuel. Thus, any price increase of these will completely influence cotton value.

3. Farmer’s Shifting Crop Choices

Expensive production costs and severe droughts made some US cotton growers plant soybean, corn, and wheat as they make higher yearly revenue than cotton.

The US National Cotton Council recorded a 17% land reduction of a cotton plantation this year. The shifting crop choices will result in a 5% world cotton demand equally adding to the surging cotton price already.

4. Synthetic Fiber Production

The birth of synthetic fiber threatens the cotton industry for the following reasons:

Lower Costs: Synthetic fiber production is cheaper than cotton. As a result, manufacturers will likely choose synthetic fiber because it’s cost-effective.

Durability: Sportswear apparel prefers synthetic fiber over cotton because of its proven resistance to wear and tear.

5. Sustainability

Cotton production requires a great amount of water and pesticide which is harmful to the environment. Manufacturers and consumers choose synthetic fiber to keep environmental sustainability.

Which variables impact the price of cotton?

• Weather Conditions
• Global Supply and Demand
• Government Policies
• Currency Exchange Rates
• Technological Advancements
• Production Costs

Where does cotton come from?

Cultivated, woven, and spun in the Indus River Valley (present-day Pakistan ) around 3,000 years B.C. The Arab merchants brought cotton to Europe by trade.

The first cotton seed in the US was planted in Florida in 1556. The colonists grew cotton seeds along the James River in Virginia in 1607.

The industrial revolution in England brought cotton into the international market. Today, China is the number one cotton producer in the world followed closely by India, the United States, Brazil, and Pakistan.

When is the cotton season?

The cotton season depends on the country’s location. Generally, cotton is a warm-season crop and is commonly planted in the spring and harvested in the fall.

In the US, the Virginian and Californian farmers plant cotton from March to June and harvest them from August to December.

In China, the cotton planting season starts in April, and the harvest season starts from September to November.

In India, cotton is planted from May to July and harvested from October to January.

Overall, there is constant cotton production throughout the year however, the highs and lows of supply depend mainly on the soil condition and climate.