Textile Associations Should Monitor Supply and Demand
February 9, 2011 The abrupt and significant price changes in March 2008 had serious repercussions to those market players who were caught unprepared. No doubt, there will be numerous studies attempting to discover logical answers to the question: “Where did we go wrong?” In Turkey, we have a saying: “The approach of Thursday is apparent from Wednesday.” In other words, it should have been obvious.
I must admit that I was not able to predict the sudden revival of cotton prices toward the end of the 2009/10 season, so soon after the world sunk into the deep financial crisis. But I was pretty sure that cotton prices would continue to rise and remain at high levels for most of the 2010/11 season, just judging by the gradual depletion of the world’s carry-over stocks.
However, I would never have dreamed of the magnitude of this price hike, doubling of the prices that had just been experienced one year earlier. I still believe that prices would never have reached those levels without of a high degree of speculation driving them.
What lessons we can draw from this extraordinary phenomenon? The answer to this question would be related to our failure to correctly assess the end-of-season cotton stock levels, along with our failure to recognize that the textiles markets in major textiles and clothing manufacturing bases had already taken an upward turn, due to a noticeable increase in consumer demand for cotton textiles and clothing while most other countries were still in recession.
Given the importance of cotton supply and demand data, textile and clothing associations should ensure the collection, analysis and dissemination of the relevant data.
The positive performance of the Turkish economy and good growth indications are reflected in the export sector, with shipments up about 11 percent over 2009.
The performance of the textile and clothing sectors has also been above satisfactory, with the total exports of textile products approaching $6 billion in the first 11 months of 2010, an increase of 17.5 percent over last year; the clothing sector totaled $13.2 billion, up 9.3 percent.
As we begin the New Year, concern about prices prevails in most of the textile production regions, which compared with many other countries fluctuates well above the Cotlook A Index in the domestic market.
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