Drought risk in US may not let cotton prices ease in near future

According to latest report of USDA, cotton production in the US may reduce in the coming season 2022-23 (August-July) to 35.92 lakh MT from 38.15 lakh MT of 2021-22. The production was 31.81 lakh MT in 2020-21. Since ICE cotton takes strong cues from the US production scenario, it may not ease in the near future.

As per the USDA report, cotton production may increase in India, China, Brazil and Pakistan in 2022-23 season. Global production is projected to increase to 264.03 lakh MT in next season from 254.61 lakh MT of 2021-22.

According to Fibre2Fashion’s market insight tool TexPro, Cotlook A- Index (USASMP) will remain as high as $1.552 per pound in August 2022 when new season will begin for US cotton. It will increase slightly from the projected level of $1.551 per pound of July 2022. Cotlook index peaked at $1.635 per pound in May 2022 but the average price is projected at $1.564 per pound for June 2022.

ALCHEMPro News Desk (KUL)