As Usual Government Intervention Fails in the End

摘要

At first glance, the application of .the words "New Frontiers" tocotton appears incongruous. After all, cotton is almost as old as civilization itself and has been widely traded formore than a thousand years. It is a mature product and one would expect change to arrive gradually and predictably.However, such is not the case today. As I write, cotton prices are hovering around 11-month lows. The cause of the current price slump is largely attributed to uncertainty over the disposal of large stocks that have been built up as a result of government intervention. As a result of three years of state purchases,the world stock-to-use ratio has risen to 0.86. In other words, reserves are available to cover more than 10 months of world consumption, the highest proportion since 1945/46.