Cotton prices recorded the fastest decline in 48 months

Factors affecting the course of the global economy and climatic events determine the direction of cotton prices this year. The pound price of cotton lost 1.7 percent of its value in January. Cotton prices, which followed a fluctuating trend in the following months due to increased geopolitical risks and weather-related concerns, rose to $0.9374 in August.

The pound price of cotton decreased by 15.7 percent in September, recording the fastest monthly decline since September 2022. Cotton lost 24.6 percent of its value in September 2022.

Thus, the pound of cotton, which started the year at $0.60, finished September at $0.7852. During this period, cotton prices gained 30 percent in value.

Fed's interest rate hike was effective in the decline in cotton

Futures and commodity markets expert Zafer Ergezen, in his evaluation to the AA correspondent, said, "One of the biggest reasons for the decline in cotton prices is concerns about global economic growth. The expectation that interest rates at high levels will slow down economic growth has brought about concerns that it will also reduce cotton demand." he said.

Ergezen emphasized that when we look at the timing of the decline in cotton prices, it coincides with the period when the US Federal Reserve (Fed) increased interest rates.

Stating that cotton prices remained at high levels this year even though there were strong sales in September, Ergezen stated that the biggest reason for this was the expectation that the demand for cotton instead of polyester would increase as oil prices remained high.

Ergezen stated that the El Nino effect and the decrease in monsoon precipitation in India also negatively affected the cotton supply, and said that the effects of this have actually been seen since the beginning of the year.

Stating that this is a profit sale, Ergezen noted that concerns about the demand for a product such as cotton, which is widely used in the industrial field due to global growth concerns, have come to the fore.

Ergezen stated that expectations that demand would decrease led to a retreat in pricing.

Rabobank Senior Cereals and Oilseeds Analyst Owen Wagner said, "On the demand side, it is a generally accepted rule that a 3 percent growth in global Gross Domestic Product (GDP) is required to sustain cotton demand. Considering high energy prices, the forecasts of international organizations indicate that it will be difficult to see a significant increase in cotton demand this year." made his assessment.

Rising oil prices increased cotton's competitiveness against synthetic fibers

Ole Hansen, Head of Commodity Strategy at Saxo Capital, stated that cotton prices have increased in recent months due to the price increases in oil and petrochemical products, the worsening condition of the cotton crop in the USA and the expectation that China will buy again, and stated that the increase in the prices of oil and petrochemical products has increased the competitiveness of cotton against synthetic fibers.

However, noting that prices fell sharply in September, Hansen said, "Textile manufacturers remained reluctant to purchase at high prices due to narrowing yarn production margins, weak orders and the abundance of affordable Brazilian cotton. The failure of demand from China to meet expectations further increased the pressure on cotton prices." he said.