The government of Ethiopia lifted the price cap on cotton on 15 August 2011 following the decline of prices in the international market.

For three months from November 2010, the price of a kilogramme of cotton was fixed at 42.78 Br a kilo. At the same time, the government had also banned exporting cotton when demand by local textile factories increased and prices in the international market soared.

The price of one kilogramme of cotton was as low 4.9 dollars in March. And in June it plummeted to less than 3.6 dollars. In August, it fell to 2.5 dollars according to Cotlook Index, which indicates the world cotton prices.

The decline is attributed to a drop in demand from cotton spinners, according to the International Cotton Advisory Committee.

The United States, India and China are the largest cotton producers in the world, contributing a quarter of the global output. The United States is the largest exporter while China is the largest importer and second largest producer of cotton.

Source: Fortune