Slumping demand for textiles has cut into cotton prices

U.S. cotton crop may shrink due to prolonged drought in Texas

The price of cotton is down 10% this year and prices of cotton futures have dropped to a three-month low this week due to mounting concern that the slumping global economy will continue to erode demand for fibers used to make textiles and clothing.

Global cotton consumption in the year ending July 31 will fall 8.2% to 112.6 million bales, the U.S. Department of Agriculture reported on Feb. 10. (A bale weighs 480 pounds, or 218 kilograms.). Cotton futures for May delivery fell this week to 43.78¢/lb on ICE Futures U.S. in New York, the lowest for an active contract since Dec. 15.

However, reduced pricing may be short-lived because of supply issues. The U.S. cotton crop may shrink to the smallest size since 1986 as a drought threatens to cut the number of acres Texas farmers can harvest later this year, according to news reports quoting Carl G. Anderson of Texas A&M University.

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Source:purchasing.com