The quantities of cotton produced for the 2024-2025 campaign are known: there will be more cotton than demand. This inevitably means that some producing countries will have difficulty finding a place in a very competitive market. We are thinking in particular of West African countries.
Demand does not match production: too limited or too uncertain, clearly not enough in the eyes of cotton traders and exporters.
Spinners do not rush to the doors of producing countries. Apart from those in Pakistan who search everywhere for cotton due to the poor harvest, the others prefer to wait. This is especially true in Bangladesh the second largest buyer of cotton in the world.
to listen to in L’Ospite dell’Africa Mezzogiorno“The challenge for African cotton is to find new markets in Africa itself”
Great uncertainty on demand from Bangladesh
The contry is undermined by inflation and hyper-indebted spinning mills: several factories have been put up for sale, officially because they are unprofitable and cannot repay the loans. These factories, in difficulty or at a standstill, are all customers who will no longer buy or buy less African cotton.But Bangladesh absorbs 70% of the continent’s white gold.
When demand weakens, prices fall or do not rise. For cotton, this translates into a market that has fluctuated around $0.70 per pound for several months. And this is the second problem facing West African cotton.
Read alsoAfrican cotton: the risks of excessive dependence on Bangladesh
Farmers’ prices are not keeping up with prices
On the continent, the prices guaranteed to growers were decided very early in the season, when international prices were much higher. Greater than or equal to 300 FCFA for a pound of cottonseed, for moast producers these prices today are out of sync with prices that have fallen.
Cotton companies that export have difficulty finding customers who offer prices above the cost price of cotton, which is also burdened by fuel and storage costs, which have increased. Result: unsuccessful tenders multiply.
Still stocks from 2023/2024
the marketing campaign thus promises to be intricate, especially as it starts with last season’s unsold goods: there would remain several tens of thousands of tons not exported to West Africa.
In the current global context, the country that fares best is not on the African continent: yes Brazil. Its very competitive cotton” continues to sell widely in all markets, particularly in China and Vietnam “, according to trader Mambo commodities.
Read alsoThe challenges of African cotton in the face of the explosion of Brazilian production
Interview with Cotton Industry Expert on the Future of West African cotton
Time.news Editor: Thank you for joining us today. With cotton production expected to exceed demand in the 2024-2025 campaign, what does this mean for west African countries facing a highly competitive market?
Expert: Thank you for having me. The forecast of increased cotton production versus stagnant demand places significant pressure on West African cotton producers. Countries in the region may struggle to find market access, particularly as demand is heavily influenced by external factors, especially in leading markets like Bangladesh.
Time.news Editor: Bangladesh is a crucial buyer, absorbing about 70% of Africa’s cotton. However, reports indicate that factories in Bangladesh are facing economic difficulties. how does this situation impact West African cotton growers?
Expert: Bangladesh’s economic challenges, including inflation and hyper-indebted spinning mills, directly affect its cotton purchasing capabilities. These factories are either cutting back on purchases or shuttering fully,which exacerbates the situation for West African farmers who heavily rely on this market.When demand falters, prices typically decline, and as we’ve seen, the cotton market has been fluctuating around $0.70 per pound for some time now.
Time.news Editor: Given the scenario of excess production and diminished demand, how are prices for West African farmers being affected?
Expert: unluckily, farmers’ prices are lagging behind the current market conditions. Manny growers had their prices locked in based on earlier projections of stronger demand. Today, those prices are no longer reflective of the market, resulting in many cotton companies unable to find buyers willing to pay prices above their production costs, which are further strained by rising fuel and storage expenses.
Time.news Editor: It truly seems like an uphill battle. What practical advice would you give to West African cotton producers who are now facing these market challenges?
Expert: It’s vital for producers to seek diversification in their markets. The challenge will be to explore new opportunities within africa itself, as the competition from regions like Brazil intensifies. Building relationships with local industries and finding ways to improve storage and export logistics could also help mitigate some of the challenges faced.
Time.news Editor: You mentioned Brazil’s success in the cotton market. What can West African countries learn from Brazil’s approach?
Expert: Brazil has successfully positioned itself with competitive pricing and strong marketing strategies. The African cotton industry could benefit from similar tactics, including promoting the quality of African cotton and enhancing supply chain efficiencies. Additionally, they should advocate for policies that stabilize prices in their favor.
Time.news Editor: as we begin the 2024-2025 campaign, do you foresee any specific strategies that could help West African cotton adapt to these changing market dynamics?
Expert: Absolutely. Collaboration is key. West African cotton producers could unite to create a stronger collective voice in negotiations with buyers. Furthermore, investing in sustainable production methods could not only help reduce costs but also enhance their marketability in a global landscape that increasingly values sustainability.
Time.news Editor: Thank you for your insights today. The cotton market indeed presents both complex challenges and opportunities for West African producers. We appreciate your valuable perspectives.
Expert: Thank you for having me. The industry is certainly at a crossroads, and it will be interesting to see how it evolves.