Vitality and volatility
February 8, 2011 Imagine the vastness of the entire collective cotton experience that you share with the cotton- and textile-industry pros from around the globe. As in perhaps no other industry, cotton professionals overwhelmingly tend to devote their entire careers to the business of cotton. And, as the cotton experience spans generations in countless families, it is woven into the DNA.
So, when the voices of cotton veterans around the world collectively exclaim, “I have never seen anything like this!” what an impression that makes. And that is exactly what I have been hearing lately, over and over again, from cotton pros around the globe.
None had ever seen the doubling of cotton’s price within a calendar year, as we saw in 2010, when the spot market for Upland reached a record peak, topping 155 cents. And none had seen the price triple within 20 months, as it did going back to March of 2009.
On its climb, cotton’s price volatility was also unprecedented, especially late in the year. That complicated the market and muddled trade. When to sell? When to buy? Those weren’t easy questions to answer.
So, what can we expect in 2011 and beyond? Will market conditions change appreciably and toss cotton’s price up and down, back and forth like a fast-paced game of ping pong? Will cotton’s price stabilize with an increase in plantings and a replenishing of stocks? Will it dive as substitutes replace high-priced cotton and speculative investors sell off?
As always, capricious Mother Nature should have plenty to say, as she did in 2010 when floods devastated Pakistan and inclement weather took a toll on cotton crops in China, India, Greece and Australia. Can we bet on a sustained increase in extreme weather events around the globe as climate change continues or accelerates?
The demand for cotton products should continue to grow in the heated emerging economies of China and India. As the more mature markets continue to climb slowly away from recession, their demand for cotton should climb as well. Can we bet on rising demand?
To see where the world of cotton might well be headed—and for insights into the new fundamentals that now propel it—let’s turn now to the experts, the cotton leaders from around the globe who graciously offer their perspectives here in our 78th Annual Edition.
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