Cotton was among the commodities whose price rose the most earlier this year. Cotton futures peaked above $1.50 per pound (1 kg = 2,2046226218 pounds) in early May. December futures for cotton were trading at $1,136 per pound on Monday this week.
Experts state two major factors that caused an increase in cotton prices in world markets – oil prices, and the decline in cotton harvest as a result of the drought.
Rising oil prices have pushed up the prices of petroleum-based fibers such as polyester and nylon. This led to an increase in demand for natural fibers such as wool and cotton, resulting in higher prices for them. With the fall in oil prices, cotton futures lost almost half of its value.
Focusing of the second factor affecting the increase in cotton prices, recently, the severity of the drought in the West and its damage to the cotton crop have pushed prices back up. The drought, initially in the USA, now in Europe, has caused cotton fields to dry out and farmers to reduce the amount of cotton they plant. As a result, cotton prices are expected to increase this year.
US cotton growers are expected to abandon millions of acres of land they planted in the spring, resulting in the smallest harvest in a decade. This is pushing global cotton prices sharply higher. Drought-affected US farmers have already abandoned more than 40% of the 5 million hectares that they planted with cotton.
Last Friday, the US Department of Agriculture (USDA) predicted a 28% drop in domestic cotton production compared to last year. The USDA noted that a severe drought and some of the hottest weather on record have scorched fields and caused abandonment.
As a result, volatile oil prices and disruptions to the harvest are expected to push up cotton prices. This could have an impact not only on farmers but on all aspects of cotton production.
PhD Candidate at Marmara University's Department of Political Science and International Relations in Istanbul, Turkey