IMPRESSIONS from a Cross-section

Over the last 2 years we have witnessed a constant and sharp upward trend in the prices of all commodities especially in the price of Raw Cotton.  The reason was the sudden worldwide realization of the energy shortage accompanied with food scarcity. As a result, the acreage now gets divided into different products, some meant for energy production such as corn and soya bean, and some meant for food and other uses.

The cotton prices a few months ago touched their all time high of $2.30 per pound in this backdrop and also due to the fact that the cotton crop in China did not do so well and Pakistan also was affected by the floods. But times of this extreme Bull Run are over, and now the world is looking towards the new cotton crop which is just round the corner.

It is worth mentioning that the only 2 countries namely Australia and Brazil have started harvesting the crops which are 80% more in amount than they were last year. Hence, we now see a downslide in the prices of Cotton. The planting in India and Pakistan points to a good crop potential for the current season whereas in USA the drought in Texas is posing a threat to the American crop. China too is facing a drought like condition and therefore it is very difficult to determine the size of the upcoming crop due to the uncertain position in the Largest (China) and 3rd Largest (USA) cotton producing countries.

If the weather during June to September -the weather months, stays conducive then the world might see a large cotton crop and in turn we might see affordable and reasonable cotton prices. But if case is otherwise, then we might be in for another upward run towards the $ 2 mark.

In conclusion, it is a bit early to make up one's mind whether to start buying cotton or to refrain.

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