The ultimate impact of COVID-19 on the cotton and textile industry is uncertain, but the sector has been impacted along with the general economy, the International Cotton Advisory Committee (ICAC) said in a new report.
Brands and retailers are cancelling orders, leaving spinners and textile manufacturers in Asia and Southeast Asia in a financial crisis, ICAC said.
“We don’t yet know what the ultimate impact of COVID-19 will be on the cotton industry, but the fast-moving pandemic has injected a tremendous amount of uncertainty into every link in the global supply chain,” ICAC said. “Millions of people are self-isolating, and the cotton and textile business is at a virtual standstill.”
Because many businesses have been required to slow down or close for the consideration of public health, manufacturing and supply chain activity in Asia and Southeast Asia have decelerated as orders have slowed or have been cancelled, “and things could get much worse in the coming months,” the report said.
ICAC echoed economists’ predictions that initial impacts of the coronavirus pandemic on gross domestic product in many major economies is likely to be significant, at least in the short term.
ICAC’s current price projection for the year-end 2019-2020 Cotlook A Index of average global cotton prices is now 73.5 cents per pound this month. The group’s first price projection for the year-end 2020-21 average of the Cotlook A Index is 64 cents per pound.
U.S. spot cotton prices averaged 47.81 cents per pound for the week ended March 26, according to the U.S. Department of Agriculture (USDA). This is the lowest weekly average since week ending April 23, 2009, when the average was 46.19 cents. The weekly average was down from 52.58 cents per pound the prior week and 71.47 cents a year earlier.
The USDA’s March Prospective Plantings Report indicates U.S. producers intend to plant 13.7 million acres of cotton in 2020-21, down 0.3 percent from the previous year.