US cotton futures were lower this week as the tropical storm Gordon faded and moved into the Southern Midwest. It brought heavy rains to the Delta, but the rains did not damage the crop as feared. Another tropical storm has formed in the Atlantic and is now a major hurricane, but may stay away from US cotton areas. It is likely to move away into Bermuda or the mid-Atlantic US coast. US weather remained good in Delta and the Southeast and has improved slightly in West Texas into Kansas with some precipitation. Crop reports indicate that the yield potential will be generally poor.
The US cotton December contract lost US cents 0.23 week on week to close at US cents 81.99 per pound. March settled at US cents 82.40 per pound down from US cents 82.58 last week. The nearby October contract settled at US cents 82.13 per pound, down US cents 0.18 on the week.
Global spot benchmark, the Cotlook A index gave back US cents 1.15 week on week to close at US cents 91.00 per pound, having lost US cents 0.55 on the weekend.
In China, a few sporadic seed cotton goods were traded in some areas in Hebei. The trading values of goods with better quality were between 15.20-16.30 yuan a kg (US cents 101-108 per pound) up from the same period of 2017. China Cotton Index inched up 14 yuan on the week, to close at 16,330 a ton (US cents 109 a pound).
In Pakistan, cotton prices moved up as spinners and exporters continued to replenish stocks. The cotton season in Punjab has reached maturity, allowing for increased availability of quality cotton. Sindh cotton was equally sought after. However, Sindh has shorter crops due to lesser sowing. The Karachi Cotton Association spot rates were raised PakRs200 during the week to close at PakRs8,360 per maund ex-Karachi. The rise strongly indicates that the crop size was doubtful even though official estimates by different government departments anticipate higher production. This cautioned buyers who started chasing quality cotton, which is currently readily available.
In India, cotton prices moved down week on week after firming up earlier on reports of lower carryover stocks in the coming season and the lower crop estimates by most cotton bodies. Prices fell INR200-800 per candy with benchmark Gujarat Shankar-6 traded at INR47,300 per candy, down INR400 from last week.
Cotton sowing is almost complete, with farmers planting 118.1 lakh hectares this year, about 2.9 lakh less than last year. This may lead to less crops and with low carryover stock, availability may fall. Moreover, with the government increasing the MSP, there is a fear that farmers may not bring cotton into the markets sooner and, therefore, the price hike was imminent but temporary.
Cotton yarn prices continue to march higher in China
The cotton yarn market in China saw a price increase for some individual varieties. Of them, 32s saw smooth sale, and 21s sold well. As the yarn market moved up slightly amid adjustment, producers saw sales going flat once again in recent times following the earlier price rise. Hence, they did not hold enough confidence on the situation in a busy season. 32s cotton yarn prices were flat 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). The coarser yarn prices of 16s were up at 15.60 yuan a kg (US$2.29 a kg, up US cents 2) and 21s at 19.60 yuan a kg (US$2.87 a kg, up US cents 5).
In Pakistan, cotton yarn prices moved down in Karachi and Faisalabad yarn markets, reflecting the previous decline in cotton prices. However, demand was not as it would normally be at this point of time. 30s carded prices in Karachi fell PakRs2-10 to PakRs168-170 per pound (US$3.01-3.04 a kg, down US cents 4-18), while 32s combed in Faisalabad declined PakRe1 to PakRs174-181 per pound (US$3.11-3.24 a kg, down US cents 2).
In India, cotton yarn price held steady amid sluggish cotton prices, which fell this week. 30s combed cotton yarn for knitting were flat at INR220 a kg (US$3.06 a kg) in Ludhiana.
