#Raw Materials
The 2022/23 Cotton Season Faces the Triple Threat: Low Production, Declining Consumption and Market Volatility
Meanwhile, US growers faced the opposite type of adverse weather, drought, and it has completely erased the West Texas crop. The effects of Hurricane Ian also have caused damage to the crop in Georgia, the second-largest cotton producing state in the country.
Even if production were unaffected by these disasters, the uncertainty about the strength of the global economy has prompted investors to anticipate a decline in consumption. A decrease in production would normally be expected to drive prices higher, but when combined with bearish macroeconomic concerns, the expectation is difficult-to-predict volatility.
With all of this grim news, we want to end on a positive note: revitalised production in West Africa. If the projected numbers come to fruition, the region will achieve its highest production ever. If nothing else, it could serve as the one bright star in what is shaping up to be a dark 2022/23 season.
Price Projections[1]
The Secretariat’s current price forecast of the season-average A index for 2022/23 ranges from xx cents to xxx cents, with a midpoint at xxx.xx cents per pound.
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[1] The price projection for 2022/23 is based on the ending stocks-to-mill use ratio in the world-less-China in 2020/21 (estimate), in 2021/22 (estimate) and in 2022/23 (projection), on the ratio of Chinese net imports to world imports in 2021/22 (estimate) and 2022/23 (projection), and the average price in 2021/22. The projection reflects a 95% confidence interval.
Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The cotton Update is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 October 2022. The next Cotton This Month will be released on 1 November 2022.
