Executive SummaryThe attached article extracts from the July/August 2018 ‘Review’ include:
‘Cotton: Review of the World Situation’ Articles Address Cotton Price Trends and Governance
- A comprehensive look at the history of cotton governance as well as analysis of China’s growing leadership in establishing multilateral, shared governance that prioritises transparency
- A feature article about cotton price trends in 2017/18, including supply and price movement, as well as how cotton is faring against its competitors
Attached, please find two major feature articles from the July/August 2018 edition of ‘Cotton: Review of the World Situation’. They address topics of both short- and long-term interest to the cotton industry.
The first article, written by Amy A. Quark, Associate Professor at the College of William and Mary in Williamsburg, Virginia, USA, is entitled, ‘Global Shifts: Governing Cotton in Historical Perspective’. Ms. Quark suggests that ‘China will again become a dominant player in the global cotton trade in the coming years’. Her article focuses on the question, ‘What does the rise of China mean for the governance of the cotton trade, or who controls the “rules of the game”’?
To answer that question, she provides an overview that begins in 1875 — when the merchants of the Liverpool Cotton Association (now the International Cotton Association) dominated due to their ability to extend credit to both up and down the supply chain — and concludes with a look at several possible future trajectories for the governance of cotton quality.
The second article, ‘Cotton Price Trends in 2017/18’, was authored by ICAC Statistician Lihan Wei and addresses multiple issues in today’s marketplace:
· The high international price;
· Supply and price movement;
· Price volatility;
· Trends in domestic prices;
· Cotton’s attractiveness vs competing crops;
· Cotton price vs. polyester; and
· The current price outlook.
‘At the end of May 2018, the international reference price for cotton (Cotlook A index) crossed the one dollar per pound mark for the first time in over six years’, Ms. Wei says. ‘The season’s average of 88 cents per pound reflects a 6% increase over the previous season’s average of 83 cents per pound.’ Following the price spike in 2011/12, she adds, this season’s price movement represents a second continuous year of growth.
Looking forward, while global stocks were projected to increase by the end of the 2017/18 season, the increase was expected to come from stocks held outside of China. ‘The implication of ending stocks in China reflected the strong and growing demand in China and the probability of further importing increases, given the structural deficit, by China to meet textile consumption, stock turnover and stock replenishment’, she says.
The articles are available in three languages: