Cotton Futures were slightly higher in the consolidating trade week. Overall, weak demand continued to impact the US market, but a smaller supply provided the support. World production and supplies are still going lower due to bad weather in growing season for major producers, including India, Pakistan and Australia. India and Pakistan are expected to import more cotton this year to cover the short domestic production. China had problems with its growing weather. Demand for US cotton has been disappointing. The US had disputes this year with major importers like Turkey, and this could impact demand for the US. Prices are down and China might start looking at the US crop, but there are worries about the quality of the US crop due to some extreme growing conditions in Texas and the Southeast over the summer and fall.
The most active cotton contract on ICE Futures US, the March contract settled at US cents 74.13 per pound, US cents 0.24 up from last week, while December settled down US cents 0.34 at US cents 74.43 per pound.
Global spot benchmark, the Cotlook A index, lost US cent 1.20 on the week to close at US cents 82.60 per pound.
In China, the spot cotton markets went range bound on a weak note, with players winding up their business for the upcoming holiday. Sellers were keen to liquidate, with offers for Xinjiang-origin hand-picked grade-3129 in Shandong at 15.70 Yuan a kg (US cents 105 per pound). Imported cotton offers for US-origin EMOT SM January-March inched lower at 15.04 Yuan a kg (US cents 100 per pound), and to 14.24 Yuan a kg (US cents 95 per pound) under 1% in-quota tariff. Spot cotton markets are likely to remain range bound in coming weeks. Meanwhile, the China Cotton Index gained 65 Yuan this week, to close at 15,498 a ton (US cents 103 a pound).
In Pakistan, the official spot rate remained unchanged at PakRs8,860 per maund ex-Karachi throughout the week, due to lacklustre business activity. In the spot session, not a single deal was reported until the weekend. According to reports, main buyers and sellers were conspicuous by their absence ahead of the announcement of the mini-budget. Export opined that trading activity will improve after the announcement. Ginners were under pressure due to huge stock of unsold stock held by them. Meanwhile, cotton growers have demanded the end of tax-free cotton imports into the country.
In India, prices of coarser variety cotton were seen rising this week and in contrast finer varieties were cheaper. This could be due to lesser arrival of the former varieties. Arrivals across major spot markets at the end of last week were at 168,500 bales. Benchmark, Gujarat Shankar-6 was traded this week at INR42,600 per candy (US cents 76.44 per pound), down INR100 from last week.
Cotton yarn
Cotton yarn markets in China remained steady during the week and prices of few specs were under weak correction amid modest transaction. 32s prices eased a bit but was sold well while others remained in lackluster. Downstream weaving mills were shutting down gradually for the vacation with the Spring Festival drawing near. Thus, markets may probably enter into a standstill in coming weeks. In Pakistan, cotton yarn prices of coarser counts were seen easing in Karachi market while few varieties were under correction in the Faisalabad yarn market. Cotton yarn makers demanded the withdrawal of the regulatory duty on cotton yarn in the mini-budget to strengthen the domestic manufacturing units. In India, cotton yarn prices generally rolled over as cotton prices moved in a narrow range. Meanwhile, improvement in US-China trade relations has started hurting cotton yarn exports from India. Reportedly, Chinese importers have renegotiated orders of Indian cotton yarn worth US$400-500m in the past few weeks.
In China, 32s cotton yarn prices moderated to 22.90 Yuan a kg (US$3.37 a kg, down US cents 3), while 40s were stable at 24.00 Yuan a kg (US$3.53 a kg). Combed yarn prices of 32s were stable at 23.50 Yuan a kg (US$3.46 a kg) while 40s combed rolled over at 26.30 Yuan a kg (US$2.87 a kg). In Pakistan, 30s carded prices in Karachi were stable at PakRs175-180 per pound (US$2.76-2.84 a kg), while 32s cone in Faisalabad eased PakRs2 at lower end to PakRs181-191.50 per pound (US$2.85-3.02 a kg, down US cents 5). In India, 30s carded cotton yarn for knitting remained unmoved at INR231 a kg (US$3.25 a kg) in Coimbatore, while export offers were unchanged at US$2.88 a kg.
