THE CURRENTLY high global prices for agricultural products have finally filtered through to the cotton industry, according to the latest price model from the International Cotton Advisory Committee (ICAC). The model predicts an average Cotlook A index of US$0,83/lb for 2008/2009, 10c (13,7%) more than the previous season and the highest average in 13 years.
The ICAC attributes that partly to a 5% lower world supply of 24,9m t, largely as a result of good prices of other crops that make it attractive for cotton producers to leave the industry.
Hennie Bruwer, CEO of industry organisation Cotton SA, says the cotton price in SA also looks much better than it did a year ago – and especially two years ago. The average price in the first week of August was 1 318,55c/kg, 14,2% higher than last year’s 1 154,76c/kg and 40,1% better than the 937,91c/kg of two years ago.
However, whether that will be sufficient incentive to urge SA’s growers to increase their cotton planting is an open question. “According to the seventh estimate for the 2007/2008 production year, SA’s harvest could total 52 394 bales of fibre, which would mean a 7% decline from the previous season’s crop.”
Bruwer says the expected crop will be the smallest in 40 years, mainly due to the perception that cotton farming is no longer viable in the light of the more favourable prices for other summer crops. Cotton is facing stiff competition from maize and sunflower particularly, where prices have now been high for more than a year. In addition, handpicked cotton is extremely labour intensive and has therefore undergone relatively larger cost increases owing to the rapidly rising cost of labour.