The market may face a very uncertain future over the next few months of the 2022-23 cotton season, said the International Cotton Advisory Committee (ICAC).
The Committee explained their concern due to the collapse of the crop in West Texas, which produces the majority of cotton for the United States, the world’s largest exporter, reports Just Style.
According to the report, drought has prompted farmers to abandon virtually all non-irrigated cotton and now they’re beginning to walk away from the irrigated crop too.
The organization also noted that the deficit could be mitigated by the sufficient crops in the other top cotton producing countries of the world but there’s no guarantee of that.
Moreover, the worries of the investors about a global recession led to the downtrend of the cotton prices making the situation even more “explosive”.
The organization also stated that the fear of going into a recession is sufficient to wreak havoc in the cotton markets.
“Buckle yourself in because 2022-23 looks like it’s going to be a bumpy ride,” the organization added.
According to the report, the Secretariat is temporarily suspending publication of the price projections, with the ICAC noting it will re-evaluate the price situation in September and determine if it should resume price forecast projection modelling.
High volatility and extenuating circumstances in global markets make it difficult for any modelling framework to produce accurate and useful information, it added saying that this is only a temporary pause and as soon as they are confident in the model data, they will release the projections.
Earlier, from a historical perspective, the only other time the price model was suspended was during the 2010-11 season of unprecedented high price and volatility.
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