Southern Cotton optimistic of upcoming trading season

LOCAL cotton firm Southern Cotton Company says it has achieved its targeted hectarage and is optimistic of performing well in the upcoming marketing season.
The recovery is projected to bring a new lease of life as other countries begin opening up on the back of stimulus packages running into trillions of United States dollars.

Melody Chikono

The company, which was targeting 60 000 hectares for this season, says it is now optimistic of achieving higher volumes, having contracted farmers throughout the country in all cotton-growing areas.

Southern Cotton Company MD Caos Nzenze this week told businessdigest that operations of the company have not been affected by Covid-19. However, the local cotton industry has not been spared as the impact of Covid-19 has suppressed consumer demand.

This has resulted in commodity prices plunging to low levels, including cotton lint prices as exhibited on the New York features exchange, cotton’s main international trading platform.

“Let me start by highlighting that epidemics are hardly a novelty, they have been shaping, mapping, and fundamentally altering human history and affecting world markets from time immemorial. Apart from exposing national vulnerabilities and insecurity, diseases have consistently threatened markets’ stability and functionality,’ Nzenze said.

“Paradoxically, while globalisation has helped in market interconnectedness and dissemination of technologies, it has also significantly increased the risks associated with such co-dependency, transmuting disease outbreaks from local events to international catastrophes with a huge impact on international markets.
“Our local cotton industry has not been spared, the downside effects of Covid-19.

We must accept that the world economy is already sliding into a recession. The Covid-19 pandemic has forcefully inhibited consumer demand which has seen commodity prices plunging to very low levels, including cotton lint prices as exhibited on the New York features exchange, which is the international exchange where cotton is traded.

“With particular reference to cotton, the world market price of lint has started picking up after China announced that it will be opening from the 8th of April and the recovery is projected to sustain as other countries start opening up and the announced stimulus packages running into trillions of US dollars start filtering through into the market,” Nzenze added.

China is the world’s leading cotton producer and a net importer of lint and its textile industry is the largest globally while the Asian giant’s uptake of lint affects international lint demand and prices.

Locally, Nzenze said, access to the markets has so far not been affected as the company’s trading partners have continued to enquire on product availability and have been pushing it to conclude supply contracts.

“We anticipate that once these lockdowns on most countries have been lifted, we should be returning to business. For Southern Cotton, on the local side, the production of cotton by the farmers has not been affected by the disease as the disease started filtering through into Zimbabwe way after the crop had already been established,” he said.

“Ginned seed is sold locally and we have not managed yet to meet demand. Ginned seed is only uplifted after confirmation of receipt of funds in our local account. The demand is so high that we have some local players who are willing to pre-finance the procurement of seed cotton so as to secure the product.”