Zimbabwe: Cotton prices in Zimbabwe are likely to rise owing to firm demand on the international market, Cotton Association of Zimbabwe director general Godfrey Buka says.
“This year’s global lint production was not adequate to keep pace with global consumption, largely due to inclement weather in some of the world’s top producing countries, such as Pakistan, Bangladesh, India and China,” he said.
Cotton lint price as depicted on the Cotlook A Index (International Cotton Industry weekly newsletter) have surged from 78c per pound last year to US$1,40 per pound for the current year.
Cotton Ginners Association chairman David Machingaidze said: “A Preliminary indication shows that the national hectarage could be around 450 000 hectares that surpasses the previous seasons which had 350 000 hectares which produced crop size of 268 000 tonnes.”
In his 2011 national budget presentation, Finance minister Tendai Biti said cotton output is estimated to reach 260 000 tonnes in 2010 from 211 000 tonnes in 2009.
The promulgation of Statutory Instrument 142 of 2010, which protects both cotton farmers and cotton buyers, through prohibiting side marketing has built confidence in the sector.
As a result, contractors who had withdrawn from the sector in 2009 returned increasing the number of supported farmers. In 2011, cotton production is projected to further increase to 300 000 tonnes.
The International Cotton Advisory Committee, a body comprising the world’s cotton producing countries, has projected a seasonal average price of US$1,56 cents per pound of processed lint.
“The highest daily average lint price quoted by Cotlook has been US$2,05 cents/pound (4 February 2011) and the lowest at the start of the 2010/11 season was US86 cents per pound. This is against the background of robust demand for lint at a time when world stocks are low and supply is limited,”said Buka
Limited supply of cotton was due to floods in major producing countries, the depreciation of the US dollar, very low stock of cotton lint globally and the increase in demand as world spinning mill consumption is going up especially in India.
Buka said: “The surge in the international prices of cotton is a welcome development and if the current trends are maintained both contractors and farmers will benefit from this. An increase in total revenue from the lint exports will boost Zimbabwe’s balance of payments (BOP) account position as there will be significant foreign currency inflows.”