The decline in global demand misses the opportunity for Egyptian cotton to benefit from the rise in the dollar

The decline in global demand misses the opportunity for Egyptian cotton to benefit from the rise in the dollar
The decline in global demand misses the opportunity for Egyptian cotton to benefit from the rise in the dollar

Posted on: Thursday, November 24, 2022 – 7:42 PM | Last update: Thursday, November 24, 2022 – 7:42 PM

Al-Beltagy: The current price will not encourage farmers to plant it next season
Abu Saddam: The prices of cotton are still reasonable and bring profits to the farmers
Al-Saadani: The export price in 2021 is double the current year

A number of cotton farmers and exporters said that Egyptian cotton did not benefit from the increase in the price of the dollar due to the decline in international prices as a result of the decline in demand due to the recession that afflicted the markets, which led to a decline in prices locally to 4800 pounds, explaining that the current price of cotton will not encourage farmers to plant Cotton next season.
Walid Al-Saadani, head of the General Assembly of Cotton Producers, said that cotton exports did not benefit from the increase in the price of the dollar due to the decline in demand and prices globally, explaining that the increase in the price of the dollar is supposed to be in favor of the local price of the product, but the export price last year was double the current year.
Al-Saadani justified the decline in global demand for Egyptian cotton due to the recession resulting from the Russian-Ukrainian war, the global economic crisis, and anticipation until prices stabilize, especially with the conflicting export prices.
For his part, Mofreh El-Beltagy, former head of the Egyptian Cotton Exporters Union and Chairman of the Board of Directors of Misr International Spinning and Weaving Company, said: Cotton prices did not rise with the increase in the dollar price as a result of the recession in the global market. Rather, the global price of cotton decreased by 50% compared to last year, to record 110 cents/libra, compared to 205 cents/libra last year, “Egyptian cotton could have benefited from the difference in the rise in the dollar and its price would have increased if international prices were stable, but the decline in the global price of cotton did not contribute to raising the price of cotton.”
Al-Beltagy expected that cotton exports would decline this year by 50% compared to last year, as a result of the recession in global markets, as purchasing priorities changed and demand for clothes and textiles declined as a result of the global recession.
Al-Beltagy added, “A period must be waited before exporting at the current price, so that the vision becomes clear, as the price may rise to about 160 and 170 cents / libra during the coming period, indicating that the price of a quintal of cotton in the local market decreased by 30% compared to last year, to reach to 4,800 pounds, but some merchants want to buy at 4,4100 pounds, which is about 2,000 pounds less than last year.
Al-Beltagy explained that the current price will not encourage farmers to grow cotton next season, so the current crop will be considered for two years, indicating that the state can buy cotton from farmers at the current price and benefit from the price difference, which will rise again during the next year and reach 5 thousand and 5600. A pound per quintal, like last year.
He pointed out that the farmer was also affected by the global crisis, as the prices of pesticides, chemicals and labor rose, and he was hoping for an increase in the price, but he was surprised by its decrease, expecting that the cotton cultivation areas will decline next season to 150,000 feddans only.
He expected an increase in the supply of cotton this season, with a production of 2.5 million quintals, as a result of an increase in its cultivation area by 20%, due to the rise in prices last year.
For his part, Hussein Abu Saddam, head of the General Syndicate of Peasants, said that Egyptian cotton exports did not benefit from the increase in the price of the dollar, with the decrease in global demand, as the quintal fell to 4,800 pounds, adding that the economic crisis led to a decline in the demand for buying long-staple cotton, from which it is made. Luxury clothes, explaining that prices could have dropped further, but the dollar’s rise helped stabilize the price to some extent.
Abu Saddam explained that Egyptian cotton is linked to international prices, both low and high, and the auction is priced according to the average price of the index globally, then speculation is made by traders in the auction according to demand. “Egyptian cotton is linked to international prices because it is not sold locally.”
He added that the rise in cotton prices last year as a result of the decrease in the area and the high demand encouraged farmers to plant it and contributed to an increase in the area this year by about 100,000 acres, bringing production to 336,000 acres, but with the abundance of production this year and the decline in demand, prices decreased again, but he sees Prices are still reasonable so far, and good gains are being made for farmers.
Abu Saddam expected that the area planted with cotton would decline next year, by about 100,000 acres, which increased last year, as farmers will fear that prices will drop further with the increase in production.
Egyptian exports of cotton increased by 101.5% in 2021, to record 1761 thousand metric quintals in the period from September to August 2021, compared to 874 thousand metric quintals “September / August” 2020, and India was the largest importer of Egyptian cotton with 1.5 million metric quintals, by 87.3% of the total, according to the Annual Bulletin of Cotton Statistics.
The amount of cotton production increased in 2021, to record 2.3 million quintals, an increase of 33.3% from 2020.


The article is in Arabic

Tags: decline global demand misses opportunity Egyptian cotton benefit rise dollar

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