Cotton prices will stay high and volatile through the newly-started season, the International Cotton Advisory Committee said, as it warned that Pakistan had lost one-third of its cotton to floods, and underlined the damage to the US crop from drought.
The intergovernmental group – which in June suspected price outlooks, citing the challenge posed by “high volatility and extenuating circumstances in global markets” – issued its first public forecast for 2022-23 at a range of 99-157 cents a pound, as measured by the Cotlook A index of physical values.
At the quoted midpoint of the range of 126.95 cents per pound for the season, as started at the beginning of August, the forecast was in line with the 131.60 cents per pound at which the Cotlook A was priced on Thursday.
“Globally, we will see continued volatility and potentially higher prices throughout the entire 2022-23 season,” the committee said.
The Cotlook A, containing elements for transport, for example, usually trades at a premium to New York futures, which for December were trading on Friday at 108.24 cents a pound.
The ICAC made the forecast as it warned that “flooding and drought are having a crushing impact on the global cotton industry”, adding that “the impacts of climate change are being felt in multiple major cotton-producing countries”.
In Pakistan – where a reported 33m people have been affected, and nearly 1,200 killed, by flooding estimated to have covered one-third of the country – “sources on the ground are reporting a large reduction in the expected crop for the 2022-23 season”, the committee said.
The ICAC cut by 500,000 tonnes (2.3m bales) to 1m tonnes its estimate for Pakistan’s cotton production this season, a result which would be the second lowest of the past 30 years.
“The massive human suffering in Pakistan is painful to witness,” it added.
For the US, the committee estimated this year’s output at “just over” 2.7m tonnes (12.4m bales) – a result which would be on its data also be the second lowest of the past 30 years, larger only that the 2.65m tonnes produced in 2009-10 as high grain prices pulled land from the fibre.
The crop in Texas, the top US cotton-growing state, “has been gravely damaged by drought, with an estimated loss of 1m tonnes compared to last year”.
The ICAC acknowledged that the key west Texas cotton-producing area “has received a good amount of rain in the past few weeks”, the ICAC said.
Official US data on Thursday showed the proportion of Texas as a whole rated in drought at 58.9%, down from a late-July high of 82.0%.
‘Could spell trouble’
However, “the precipitation has come much too late to help” cotton on non-irrigated fields, the ICAC said.
Meanwhile, for irrigated cotton, the rains “could spell trouble for quality” if falling on crops with open bolls.
The US Department of Agriculture reported as of Sunday that 35% of Texas cotton had bolls opening.
It rated 15% of the Texan crop in “good” or “excellent” condition, compared with 53% assessed as “poor” or “very poor”.
The US Department of Agriculture, citing crop losses in Texas, three weeks ago slashed its forecast for US cotton output in 2022-23 by nearly 3m bales to 12.57m bales.
That would represent a decline of nearly 5m bales year on year, despite a 1.3m-acre rise in plantings