Global Cotton Prices Hit 28-Month High
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ICE cotton futures climbed to 89.30 cents/lb, as global consumption exceeding production and drought-induced yield losses increase the risk of a market supply deficit.
Cotton Prices Peak in the Market
ICE cotton futures reached 89.30 cents/lb, marking a 28-month high. Cotton prices in global markets recorded a monthly increase of 8.93% and an annual increase of 32.94%. The increase in speculative funds' net long positions to 78,668 contracts has significantly boosted price momentum. However, following a 10.9% rise in the last month, weak textile demand in China and Turkey, along with profit-taking, continues to create risks in the market.
Consumption Significantly Exceeds Production
With global consumption outpacing production, the cotton market is once again facing a serious risk of a supply deficit. According to data from the U.S. Department of Agriculture (USDA), global cotton consumption is expected to reach 122.9 million bales, the highest level in six years. In contrast, world production is projected to decline to 117.6 million bales. U.S. export commitments have reached 4.235 million bales, while Vietnam's cotton imports are forecast to reach 8 million bales.
Drought and Heat Impact Yields
Extreme heat and drought conditions affecting production centers are rapidly pulling down yield expectations. In the U.S., the proportion of cotton rated 'good to excellent' has fallen from 46% to 40%, and in the latest assessments, to 38%. A decrease of more than 10% in planting areas in China's key production region, Xinjiang, is triggering supply pressure. Strengthening El Niño conditions and adverse weather events directly threaten harvest yields.