After several years of ascending prices in the global market of cotton – in Feb 2011 they hit a historical record of $2 per pound (twice as high as in 2010) – the prices have been rapidly declining ever since. reports that in May 2011 the global prices of cotton collapsed by 30% as compared with March’s prices.
Obviously most traders and investors were surprised with such a decline. In early 2011 the world’s major producers of clothing warned about the forthcoming increase in the price on their products. But then suddenly China – the world’s major importer of cotton – warned about the reduction of its import form 2.84M tons down to 2.5M tons. For comparison sake, in 2010 China increased its import of cotton by 73%.
China’s reduction of import wasn’t the only reason for May’s price decline in the global market of cotton. Other reasons are last year’s substantial reserves and this year’s expansion of sown areas.
According to the Department of Commodity Trading, , today’s cotton prices have fallen down to $3.9K per ton against $5.2K in early 2011. However, this is not the limit.
