eBusiness Weekly
Business Writer
Following price volatility during the first half of the year, global cotton prices rallied 22 percent last week, the biggest jump since December 2012.
ICE Futures US rose almost 21 percent for its biggest week in 12 years. Since then, it has dipped less than half a percent, but still looks very uncertain going into next year.
Cotton is one of Zimbabwe’s largest agricultural export commodity, but the value of the exports were significantly affected this year following a massive dip in prices.
The bulk of Zimbabwean fibre is sold on global markets and the country is a price taker because it cannot compete with huge volumes produced by countries such as China, the U.S, Australia and India.
“We had a tough marketing season and we got getting into new cropping season with prices still subdued prices…we hope the outlook remain positive,” an executive with a leading cotton company said. “As it stands, it is still a very unpredictable situation.”
Lint prices are usually referred on the Cotlook A index or to the latest prices quoted for the nearby futures contract on ICE futures (Memphis) U. S in New York.
The A index is defined as the average of the cheapest five quotes delivered to the Far East Asian markets while ICE futures forms the basis for live cotton trading.
According to ICE, cited by investor.com, jittery speculators and investment firms concerned about a global recession had driven cotton prices down from early May to mid-June, then again in September through October, when the market hit its lowest since.
“This is an especially dangerous development because we don’t need to go into a global recession to cause problems. Fear that we might go into a recession is sufficient to wreak havoc in cotton markets. Buckle yourself in because 2022-23 looks like it’s going to be a bumpy ride. As we open the 2022-23 season, the cotton market is looking at a very uncertain future over the next few months,” the ICE said.
