US cotton futures crawled in the week ended 31 August, though closing was the lowest third of the entire week’s trading range and paced to the end of August with a steep loss of 3-4%. The US cotton December contract gained US cents 0.59 week-on-week to close at US cents 82.22 per pound. March settled at US cents 82.58 per pound up from US cents 81.79 last week. The nearby October contract settled at US cents 82.31 per pound, up US cents 0.50 on the week.
US weekly export sales slowed to 161,200 running bales for this season from the prior week and were below expectations. China was the leading buyer for both crop years, booking 44,500 RB for 2018-19 and 48,400 for 2019-20. The USDA anxiously awaited details of an emergency aid package pledged last month in response to ‘unjustified retaliation’ to US trade policies. The US$4.7bn in payments to US agricultural producers included a cotton rate of US cents 6 per pound. The tariff mitigation program is expected to address the losses cotton producers were facing in the marketplace.
US weather remains good in the Delta and Southeast, and has improved slightly in West Texas into Kansas with some precipitation. The harvest has been active in far southern parts of Texas, but no yield reports were released yet. Crop scout reports indicated that the yield potential would be generally poor. The world was also watching the progress of the Indian monsoon, which was below normal, but generally good enough to support crops.
Global spot benchmark, the Cotlook A Index regained some of the past week's losses, despite falling on the weekend. The Index was up US cent 0.75 week-on-week to close at US cents 92.15 per pound, having lost US cent 0.50 on weekend.
In China, spot cotton markets continued to remain in correction, with fresh cotton purchasing season to begin. Procurement prices for seed cotton in Hebei were pegged at 7-7.20 yuan a kg (US cents 47-48 per pound). Meanwhile, spot offers for lint cotton were at 16 yuan a kg (US cents 106 per pound). China Cotton Index inched up 16 yuan on the week, to close at 16,316 a ton (US cents 108 a pound).
In Pakistan, cotton trading was focused on better grade with flexible prices and buyers concluded month forward deals for better grades on slightly higher price during the week. The activities at ginneries as well as major stations remained firm on back of growing demand of all grades of lint. The Karachi Cotton Association (KCA) spot rate gave back PakRs100 on the week to PakRs 8,160 per maund ex-Karachi. Overall trading activity remained moderate in term of volumes as availability of better grades was depleting.
In India, cotton prices moved down across varieties by INR100-400 per candy coarser cotton cheaper by INR200-400 and finer cotton by INR100-200 a candy. Benchmark Gujarat Shankar-6 was traded at INR47,700 a candy, down INR100 from last week. Market players were optimistic on crop prospect expecting good crop this season and there will be no need to import much cotton this year.
Cotton yarn prices surge in China, down in Pakistan
Cotton yarn prices moved in opposite directions in Asian markets, with China witnessing increases and falling in Pakistan this week. The move was in line with the change in cotton fibre prices. In China, prices carded and regular count yarn moved up faster than combed yarns of all counts. This also implies improved market condition and warming up demand. 32s cotton yarn prices were up at 24.30 yuan a kg (US$3.56 a kg), while 40s were at 25.30 yuan a kg (US$3.71 a kg), both up US cents 5 also due to weak US$. The coarser yarn price of 10s was flat at 14.60 yuan a kg (US$2.14 a kg) and 21s up at 19.60 yuan a kg (US$2.87 a kg, up US cents 5).
In Pakistan, both the Karachi and Faisalabad yarn markets witnessed a sharp decline in cotton yarn prices with high end prices receding faster than lower end. The fall largely reflected the 4.5% drop in cotton spot rates at KCA. 30s carded prices in Karachi fell PakRs10 to PakRs170-180 per pound (US$3.05-3.22 a kg), while 32s combed in Faisalabad declined PakRs11-15 to PakRs175-180 per pound (US$3.13-3.22 a kg), both down US cents 20-30 on the week.
In India, 30s combed cotton yarn for knitting were flat at INR220 a kg (US$3.10 a kg) in Ludhiana. The export price for 30s combed was unchanged at US$2.93 per kg.
