{"id":25464,"date":"2020-04-07T10:45:07","date_gmt":"2020-04-07T08:45:07","guid":{"rendered":"https:\/\/baumwollboerse.de\/uncategorized\/what-is-currently-causing-cotton-prices-to-fall\/"},"modified":"2022-09-29T18:07:00","modified_gmt":"2022-09-29T16:07:00","slug":"what-is-currently-causing-cotton-prices-to-fall","status":"publish","type":"post","link":"https:\/\/baumwollboerse.de\/en\/what-is-currently-causing-cotton-prices-to-fall\/","title":{"rendered":"What is Currently Causing Cotton Prices to Fall?"},"content":{"rendered":"\n

Interview with Axel Trede, board member of the Bremen Cotton Exchange and Managing Director of the cotton retailer Cotton Service International .<\/em><\/p>\n\n\n\n

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Axel Trede<\/figcaption><\/figure><\/div>\n\n\n\n

Cotton prices have been falling steadily since February. This can be seen in the Cotlook A, the New York Futures and in the performance of the CIF Bremen, which are all essential benchmarks for the market. The Cotton Report editorial team discussed the background and influencing factors with Axel Trede, board member of the Bremen Cotton Exchange and Managing Director of the cotton retailer Cotton Service International. It seems reasonable to suspect that the corona crisis could be the cause.<\/strong><\/p>\n\n\n\n

<\/p>\n\n\n\n

Cotton Report: Mr Trede, where are the causes of the currently\nfalling cotton prices to be found?<\/h2>\n\n\n\n

Axel Trede: Following the increase in cotton prices from October 2019 to\nFebruary 2020, the negative price development in recent weeks is solely a\nresult of the corona crisis. It is an expression of current fears that a\nmassive drop in consumer demand will have a significant impact on the entire\ntextile chain. This is leading to falling prices. This trend can also be seen\non the stock exchanges and other commodity markets.<\/p>\n\n\n\n

Is the current price level partly due to the long-term consequences of the trade dispute between\nthe USA and China? Do Chinese Stocks still influence the current price level?<\/h2>\n\n\n\n

No! In terms of prices, the trade\nconflict between the two major cotton powers has already faded into the\nbackground. We saw that prices recovered towards the end of the conflict. It\nremains to be seen whether any winners or losers can be defined from this\ndispute. The fact is that China has ordered more cotton from the United States\nin recent weeks. In addition, it was primarily a bilateral dispute which, in\naddition to great uncertainty, led to distortion in the textile chain. Compared\nto the trade dispute, the corona crisis is a pandemic with serious consequences\nworldwide. Moreover, cotton stocks in China are no longer a decisive factor in\nterms of price \u2013 they are at a level that can easily be dealt with by the\nChinese government.<\/p>\n\n\n\n

What economic effects of the corona crisis are causing\nconcerns for the market on the production side?<\/h2>\n\n\n\n

A low price level will deter cotton\nfarmers from growing cotton fibre for the next season if they have an\nopportunity for alternative products such as soya bean, corn or other cereals.\nThe decision on what to grow will be made in the northern hemisphere in the\ncoming weeks and it will be interesting to see how farmers choose. A\nsignificant reduction in cultivation can lay the foundation for a price\nrecovery in the foreseeable future.<\/p>\n\n\n\n

How is cotton consumption developing against the backdrop of\nthe corona crisis?<\/h2>\n\n\n\n

As all of us can probably appreciate,\nthe signs are not currently pointing to \u2018consumption\u2019. Of course, this also\napplies to textiles. At the retail level, there is the threat of massive losses\nin sales in affected countries as a result of the strong market restrictions\nwith shop closures and bans on contact to reduce the risk of infection. There\nis therefore a risk to the functionality of the marketing system. In contrast\nto long-term consumer goods such as cars or machines, fashion is a seasonal\ncommodity or, in a manner of speaking, a \u2018perishable\u2019 good \u2013 summer fashion is\nno longer saleable in the winter months. Revenues are being lost and it will be\nimpossible to offset these to the same extent in the future. Many retailers and\nbrands are therefore cancelling current seasonal orders due to the fear of\nliquidity problems and a lack of demand, which in turn is having a significant\nimpact on production in spinning and weaving mills and textile and clothing\nmanufacturers in the European producer countries, as well as primarily in Asia,\na major consumer of cotton.<\/p>\n\n\n\n

How long will the crisis last?<\/h2>\n\n\n\n

Of course, this is not exactly\nforeseeable \u2013 but alongside many incalculable factors and effects, the cause is\nfortunately finite. A vaccine will be available in the foreseeable future and\nattempts are being made in various countries to limit the massive economic\nconsequences, which are acute for many people, with substantial aid programmes.\nMarkets are expressing expectation, but not reflecting the current state. In\nthis respect, we can still expect very fragile market conditions as long as\nthere is great uncertainty. However, the markets will react earlier, as soon as\nthe first light at the end of the tunnel becomes visible.<\/p>\n\n\n\n

Thank you for the interview!<\/h2>\n","protected":false},"excerpt":{"rendered":"

Interview with Axel Trede, board member of the Bremen Cotton Exchange and Managing Director of the cotton retailer Cotton Service International . Cotton prices have been falling steadily since February. This can be seen in the Cotlook A, the New York Futures and in the performance of the CIF Bremen, which are all essential benchmarks […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[74,81],"tags":[],"class_list":["post-25464","post","type-post","status-publish","format-standard","hentry","category-allgemein","category-interviews"],"acf":[],"_links":{"self":[{"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/posts\/25464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/comments?post=25464"}],"version-history":[{"count":1,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/posts\/25464\/revisions"}],"predecessor-version":[{"id":25465,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/posts\/25464\/revisions\/25465"}],"wp:attachment":[{"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/media?parent=25464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/categories?post=25464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/baumwollboerse.de\/en\/wp-json\/wp\/v2\/tags?post=25464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}