cotton

The cotton market registers its largest increase since 

According to PREMIUM TIMES data, the volume of production and consumption of cotton in Nigeria rose. The hike was by at least 7.5% in 2020 after the figures dipped in 2019.

In comparison, cotton production touched 1.8 million tonnes in 2006. Meanwhile, commodity production reached 1.7 million tonnes. By 2014, both figures dropped to 920,000 metric tonnes and 690,000 metric tonnes, respectively. 

CBN intervention.

The rise followed the Central Bank of Nigeria’s ban of traders from having official access to forex to import textiles into the country.

By 2019, when CBN did this, Nigeria’s cotton production stood at 920,000 metric tonnes. Meanwhile, consumption surged to 989,000 metric tonnes.

By its strategy, the central bank of Nigeria tried to revive the local fabric production industry. Farmers claimed that the CBN restriction had supported their business in many ways. It has created ginnery across the country, created many jobs, and contributed to the textile industry’s overall growth.

According to Anibe Achimugu, the president of the National Cotton Farmers Association of Nigeria, the restriction of forex on textile imports was a game-changer to the industry. The ban raised the demand for Nigeria’s cotton, and farmers now have a market for their products.

Olorunfemi Michael, a cotton farmer in Ekiti State, said the main reason for the country’s textile industry collapse was foreign exchange sales for the importation of textile and garment materials. Forex banned textiles encouraged local production of cotton and textile materials.

The pandemic hardly hurts cotton prices.

Cotton’s rally began nearly a year ago, from late March 2020, when it settled at just under 51.15 cents a pound. From there, it is up about 77% to Friday’s rate of approximately 90.65 cents. During this period, it has only closed May in red, when it fell by 0.3%.

This means that the coronavirus pandemic, which has lasted for almost a year, has barely weighed down cotton prices. The demand for this industrial commodity can be used to measure economic performance, just like copper.

Copper futures on the New York COMEX have delivered a more consistent performance through the COVID-19 upheavals, closing in the red for just three of the past 18 months.

Copper has increased from $2.60 per pound in August 2019 to 3.92 this Friday. It means that an investor who has maintained a long position in the commodity will have already gained 50%. Like cotton, copper had also delivered 75% investment profits last year.

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