Supply chain disruptions continue to affect world cotton market: NCC

In the early weeks of 2022, the supply chain disruptions continue to affect the US and world cotton market and the COVID-19 Omicron variant is creating disruptions in various parts of the world, according to the National Cotton Council (NCC) economists who have pointed out a few key factors that will shape the US cotton industry’s 2022 economic outlook.

This past year can be characterised as a year with significant uncertainty and volatility in the global economy and the world cotton market. The global economy recovered at a much faster pace than expected as COVID-19 restrictions were relaxed and world economies reopened. Strong world cotton demand has resulted in the highest cotton prices in a decade. However, the lingering effects of the COVID-19 pandemic’s shock to global trade have created an unprecedented level of stress and disruption on the entire supply chain, from transportation costs to labour availability, NCC said in its report.

In the analysis of the NCC Annual Planting Intentions survey results, Dr Jody Campiche, the NCC’s vice president, economics & policy analysis, said, “The NCC projects 2022 US cotton acreage to be 12 million acres, 7.3 per cent higher than 2021. Although cotton prices are higher than in recent years, higher input prices and supply chain disruptions have resulted in significant increase in production costs for 2022. Most producers are expecting a significant increase in input costs in 2022, largely due to higher fertiliser and chemical costs.”

In the analysis of the NCC Annual Planting Intentions survey results, Dr Jody Campiche, the NCC’s vice president, economics & policy analysis, said, “The NCC projects 2022 US cotton acreage to be 12 million acres, 7.3 per cent higher than 2021. Although cotton prices are higher than in recent years, higher input prices and supply chain disruptions have resulted in significant increase in production costs for 2022. Most producers are expecting a significant increase in input costs in 2022, largely due to higher fertiliser and chemical costs.”

A tighter US balance sheet, supply chain disruptions, speculative money flow, overall increases in commodity prices, and strong demand are creating a bullish sentiment for cotton prices. However, additional restrictions related to the COVID-19 pandemic, a slow-down in world economic activity, and low man-made fibre prices could put downward pressure on cotton prices in 2022.

A tighter US balance sheet, supply chain disruptions, speculative money flow, overall increases in commodity prices, and strong demand are creating a bullish sentiment for cotton prices. However, additional restrictions related to the COVID-19 pandemic, a slow-down in world economic activity, and low man-made fibre prices could put downward pressure on cotton prices in 2022.

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