26 April 2012

Zimbabwe: Lint Price Crash Leaves Cotton Ginners Stranded

THE current global lint price crash has created challenges for cotton ginners in disposing their lint at profitable prices. Cotton Ginners' Association of Zimbabwe director-general Mr Godfrey Buka yesterday said lint was being sold at prices below the cost of production.

He said this was causing huge losses to farmers.

"The record peak period was at a time when the Zimbabwean cotton was still in the fields and therefore not ready for marketing. This period of high lint prices was, however, shortlived as prices took a downward spiral from the end of March 2011 to the present," he said.

He said that high demand for lint and speculative tendencies initially pushed prices up resulting in very high prices being quoted on the Cotlook A Index, causing serious price volatility.

"The peak price went up to US$2,45 per kg. This situation existed during Zimbabwe's growing season up to the time just before the marketing of seed cotton.

"High demand from the Chinese market pushed the prices up but eased gradually resulting in prices declining," Mr Buka said.

The lint price decline, he said, started when Zimbabwean growers began delivering their crop for sale after the domestic price negotiations had already been concluded.

At the start of the domestic cotton marketing season, ginners and growers negotiated and agreed on a pricing formula based on the International Cotton Advisory Committee's average lint price of US$1,62 per pound projected to June 2011 as a basis for the minimum prices. But the market crashed to levels just above US$1 per kg at the start of the marketing season.

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