African cotton producers brace for price drop

Wednesday 15th of February 2012 05:46:04 PM

In Zimbabwe cotton producers, who benefited from high producer prices in 2011, have been told to prepare for a ‘massive’ drop in income in 2012, as a result of the declining price of lint on the international market. Prices on the Karachi exchange plummeted early in February as a result of a flood of Pakistan produced lint onto the national market and that added to the laments of African famers who are watching a predicted record crop of seed cotton on the world markets, possibly the highest since 2004. China and India are leading the world in the bumper cotton harvest predictions.

China is the biggest producer of cotton, although very little of it is long-staple, and the current projection is for Chinese cotton productivity to increase by 13% above 2011 while India’s lower projected increase of 9% is commensurate with that being suggested for Pakistan. Australia, a country that is a swift agricultural commodity swapper, is expected to increase cotton production by an astonishing 27% in 2012, largely as a result of sugar cane price declines and the farms being transferred to cotton production.

It is likely, therefore, that production will exceed manufacturing capacity, and a surplus on the market that could drive lint prices lower still in 2012. America and India are likely to manage better with overstocks, as they both have national textile markets that can utilise both long-staple and short-staple cotton, but African producers have limited access to local textile markets and therefore end up with larger overstocks and less cash crop income.

Amrita Malik

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