Comprendre les enjeux de l'agriculture

The year 2024 has seen contrasting dynamics in the world of commodities. While some have performed exceptionally well, others have had another year of decline.

In an agricultural commodity market where cocoa, coffee, frozen orange juice and rubber shone in 2024, cotton looked rather gloomy. The plant fiber lost 14% of its value, closing at 68.4 cents per pound (about 453 grams) on the International Continental Exchange (ICE) in New York.  Only soybeans performed worse in the agricultural commodities category (-22.83%).

This is the third consecutive year of decline in cotton prices after declines in 2023 (-3%) and 2022 (-26%).

In detail, prices rose sharply in February, chaining three consecutive sessions above the symbolic 100-cent mark on the last three days of the month, with a year-long high of 103.75 cents on February 28.

These prices then corrected between 90 and 99 cents throughout March before falling during the rest of the year. Overall, the weakness in cotton prices is the consequence of abundant supply both in West Africa, which has recovered from the decline recorded in 2022/2023, and in Brazil, which has become the world’s leading exporter, dethroning the USA with 2.6 million tonnes shipped in 2023/2024.

For its part, demand was sluggish, particularly in China, the world’s largest importer, with an unfavourable economic situation, the strengthening of the dollar which made the fibre listed on the ICE less attractive to importers and the rise in prices.

For this year, the outlook for world cotton prices remains mixed. Global production is expected to reach 26 million tonnes in 2024/2025, pushing global stocks to a record high of 16.9 million tonnes. Meanwhile, China’s imports are expected to melt to 1.72 million tons, 47% less than in 2023/2024. The Middle Kingdom is expected to sink under cotton bales with a record stock of 8.1 million tons.

Beyond these market fundamentals, the dollar could strengthen further with the arrival of Donald Trump in the White House. On the other hand, the prospect of an increase in oil production, particularly in North America and on the side of the OPEC countries and their allies, could give a boost to the production of polyester, the great enemy of white fiber.

With a potential decline in oil prices, the competitive advantage of polyester made from its derivatives could further widen compared to cotton. Already, it is the most produced fiber for textiles and the most used material in ready-to-wear.

 

Source : Agence Ecofin