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Cotton prices set for big fall
Cotton prices set for big fall

Cotton prices set for big fall

FMCG SUPPLIER NEWS - Dec 5th 2011, 08:54

Falling consumption and a record crop will see cotton prices fall significantly next year according to analysts of the cotton market as stockpiles reach their biggest since 2005. 

Goldman Sachs, the international banking giant, said in a report on the 10th November that in 6 months cotton will hit $85 cents, down on its previous estimate of $1.

Output of the crop has been rising from Australia, China and India which has covered the loss of production from the US, which was severely affected by a drought through the season.

The US Department of Agriculture has estimated that in the 12 months ending in July the harvest will increase by 7.5% to 123.89 million bales, while demand will fall to a three year low of 114.27 million bales.

James Dailey of TEAM financial management LLC told Bloomberg that "It's a double whammy," adding "Cotton is facing the worst-case nightmare for a commodity, where you have a glut in physical production combined with weakening demand."

On the 25th November cotton was trading at $9082 cents per lb on the ICE Nybot.

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