International Cotton Market: Another Challenge For Fiber Industry

Around 100 million families around the world are involved in the production of cotton. About 300 million people are engaged in cotton storage, pportation, cotton gin and packaging.

At the same time, the cotton industry has also made fiber and textile machinery constantly renovated and created a lot of updated equipment.

Thousands of years ago, cotton was good for mankind. Until today, human beings are inseparable from this agricultural product.

But today, due to the financial crisis, the price of world cotton has also experienced ups and downs.

Cotton production and demand have been increasing in the past decades.

Because of the continuous birth of new technologies, the use of cotton is becoming more and more extensive.

In 1950, world cotton output increased from 7 million tons to 27 million tons 4 years ago, and dropped to 23 million tons in 2008.

The average annual increase is about 2%.

At the same time, cotton began to increase production in the middle of last century since 90s, jumping from 600 kilograms to 800 kilograms per hectare.

The development of traditional cotton species, the improvement of biotechnology, the improvement of irrigation capacity, the use of pesticides and the rational application of chemical fertilizers have increased cotton production and the cost has been decreasing.

A 2007-2009 year survey shows that the cost of cotton production all over the world has been reduced.

However, the demand for cotton is increasing.

The average frequency increases by 2% per year.

As of 2007, the world's total cotton output reached 26 million tons.

But since 2000, only China, India and other developing countries have actually increased production.

However, the use of cotton in developed countries is decreasing, and international cotton prices are also falling.

In the 70, 80 and 90s of last century, the price of cotton per pound remained at 70 cents, but in the past ten years, its price was lingering between 50-60 cents.

Cotton prices continued to fall in 2007-2008 years, so many countries began to cut production.

Due to the bad market and bad climatic conditions, it is estimated that the cotton planting area, output and price will go down in 2008-09.

Experts predict that in the next 2009-2010 years, the world's cotton output will remain between 2300-2400 tons.

In the case of reduced cotton production and reduced production, world cotton prices may rebound.

In the 2008-2009 year, the output of cotton in the United States was below 14 million tons, and the output of China, India, Brazil, Uzbekistan and Turkey decreased. Only Pakistan increased, and the United States had been reducing production for three years.

In 2009-2010 years, China and Turkey may lower their output.

Output in the US and India may rise slightly.

But thanks to the rebound in world economy in 2010, demand for cotton could also rise.

Cotton demand for cotton mills in China, India and Pakistan may increase, while cotton consumption in some smaller countries may be reduced.

From the world's cotton stocks, we can see that the demand for cotton importing countries is decreasing.

The world's total stock is 6 million 500 thousand tons, only China's cotton imports and inventory remain stable, reaching 1 million 500 thousand tons.

In addition, imports from Turkey and Pakistan may also increase.

And US cotton exports could be further reduced to 2 million 200 thousand tons, a drop of 23%.

In fact, in the past 2007-2008 years, the world's cotton market has been affected by three major crises: the consumer price crisis (due to higher agricultural production costs and reduced cotton planting areas), another crisis from the cotton futures index mechanism, and another crisis from the global financial and economic crisis.

In the first half of 2003-2008, world consumer prices rose, and most commodity prices rose. This crisis reached its peak in 2007.

At the same time, crude oil prices rose from 29 US dollars per barrel to US $133 in 2008.

Rising energy prices are driving up fertilizer prices.

The world bank fertilizer price index rises by 2 percentage points, and cotton prices rise accordingly.

In fact, the rise in energy prices has led to an increase in the cost of all agricultural products.

At the same time, the stock of major agricultural products has been reduced, and its price fluctuation has been promoted.

In fact, the demand generated by some countries is due to the government's subsidies and mandatory tasks for biofuels.

Since 2007, the governments of some countries have launched the practice of stimulating higher crop prices, and the prices of many grain crops have been higher than in the past for a long time.

This makes cotton production cost more than 20% of soybean, corn and wheat production costs.

This is because the demand for fertilizer for cotton production is higher than that of these crops, and more pesticides are needed.

As a result, the cost of cotton is more susceptible to fluctuations in the price of crude oil and fertilizers.

As a result, the price and profit of grain and oilseed crops are higher, and therefore more favored by agricultural companies.

Many farms have abandoned cotton crops and converted to other crops.

In addition, in early 2008, there was a crisis of cotton futures in the world.

Intercontinental trading prices fluctuated.

This phenomenon has seriously affected the world's cotton prices.

In March 2008, for example, cotton futures rose to 90 cents per pound and fell to 70 cents in the same month.

This has brought huge crises to large traders, and some businessmen have lost their fortune.

They had to withdraw from the cotton futures market.

In addition, the global financial and economic crisis began to deepen in 2007.

As the developing countries are experiencing rapid economic growth, the developed countries represented by the United States have experienced unprecedented credit, finance and consumption crisis.

It is not until 2010 that the great crisis can be truly alleviated.

However, as the first two crises have not yet been alleviated, the textile market has been affected by the consumer and cotton consumption market.

As a result, because of the tight credit of textile companies, the pace of their purchase of raw materials also slowed down.

In fact, many cotton producers in the United States and Europe began to cut production and limit production many years ago.

Only China and India, the two largest textile producing countries in the world, have become the main force of cotton consumption.

Because of worldwide credit tightening, many cotton producers are getting more and more difficult to raise funds.

Therefore, the world's cotton production industry will also face greater challenges, including financial, environmental protection and cost competition, as well as the field of man-made fiber competition.

Since the mid 90s of last century, cotton production per hectare has begun to decline.

In 1988, the price per unit area of cotton per hectare in the world was 1350 US dollars, but hectare per unit area decreased to 1130 US dollars in 2008, down to 1/6, which seriously hurt the enthusiasm of cotton growers.

In the 80s of last century, production and processing costs declined, and many manufacturers began to expand production. However, due to the sluggish market, there was another crisis in cotton production.

Before long, the price of cotton market began to go down.

This has led to a continuous decline in cotton prices in many parts of Africa and Asia.

The so-called continuous production system and sustainable productivity means the ability to not weaken production in the future because of today's production.

Over the past 40 years, the use of inorganic fertilizers and pesticides has brought about many negative effects on nature and sustainable production.

To this end, researchers began to explore the development of an ecological, socially and economically integrated crop production system.

Because cotton use more fertilizer and pesticides, people inevitably pay attention to cotton crops.

In order to avoid the impact of cotton production on the environment, Australia has pioneered the best farmland management implementation system.

Today most cotton producing countries have developed a corresponding strategy for sustainable development.

However, as the growth of the population and the increase of income have driven the textile and garment to increase further, especially in January 2005 under the WTO trade rules, the textile industry has been integrated, and the raw materials have increased rapidly.

The world's cotton fiber industry also believes that the market demand for cotton fiber will increase by at least 500 thousand tons.

But contrary to expectations, the price of raw materials related to cotton fiber is in a strong competition with chemical fiber, and the price is in a long-term predicament. Compared with the 60s of last century, it is almost lingering.

In recent years, the average annual subsidy of the India government to cotton production is only 400 million US dollars, and the Pakistan government's subsidy to cotton is less than US $8 million.

The governments of the European Union, Turkey and Mexico have little subsidy to their own cotton.

The world's cotton fiber consumption reached a high level of 26 million tons only in 2007, but the financial crisis followed.

The study found that the total demand for various fibers in the market has doubled, while the share of cotton in the world textile industry has dropped from 79% to 40%.

This is because the members of the world economic cooperation and development organization mostly subsidize textile exports, while the subsidy to the cotton industry is only 1%.

Another factor in the weakening of cotton prices is the weakness of the US dollar.

Because of the weakness of the US dollar in the world cotton futures market, futures prices in 2008-09 fell by 16%.

This trend has seriously affected the trend of cotton prices.

Because of this factor, world cotton futures market analysts expect cotton futures prices to remain between 44-61 cents per pound in 09-10.

Under such conditions, the long-term growth of cotton will be difficult, but at the same time, cotton industry will involve many areas, such as consumption, employment and market.

With the recovery of the world economy in 2010 and the further improvement in 2011, the world cotton fiber industry is convinced that consumers all over the world tend to choose the natural, renewable and comfortable trend. So the growth of cotton fiber is not to be doubted.

In addition, the India industry believes that the consumption of cotton in India textile mill will increase by 8.3% this year.

Countries such as China, Pakistan, Bangladesh and other countries exporting cotton yarn and clothing may face a shortage of cotton fiber, which will lead to a continuous rise in world cotton prices.

The most important problem today is how to maintain the growth of cotton fiber, and how to reduce the damage to the environment and create conditions for sustainable development.