Cotton US futures were lower as Hurricane Florence targeted Carolina’s coast. It lost force and was named a Category 2 storm as it approached land. The wind and precipitation were still big enough to significantly damage affected states, mostly from Southeast Virginia to South Carolina. Cotton speculators sold due to the weaker winds seen in the storm. The USDA’s WASDE report increased production estimates on an increased area as yields were lower contrary to cotton players’ expectation of a slight decrease in production. It also increased exports and forecast only a slight increase in ending stocks despite the increased production.

Meanwhile, more storms were forming in the Atlantic that could bear down on other cotton growing areas. Rains from the Indian monsoon have been below normal, but generally good to support crops. China has been active in India buying and will buy as much as possible there to make up for production losses inside of China.

The US cotton December contract lost US cents 0.16 week on week to close at US cents 81.83 per pound. March settled at US cents 82.14 per pound down from US cents 82.58 last week. Nearby October contract settled at US cents 81.90 per pound, down US cents 0.23 on the week.

Global spot benchmark, the Cotlook A index, inched up US cent 0.10 week-on-week to close at US cents 91.10 per pound, despite declining US cent 1.05 on the weekend.

In China, trading values of better-quality cotton were between 15.25 and 16.35 yuan a kg (US cents 101-109 per pound) up from last week. The China Cotton Index gained 13 yuan on the week, to close at 16,343 a ton (US cents 108 a pound).

In Pakistan, the cotton market was dismal, where prices tended to move lower and trading volume declined owing to slow demand from textile industry and exporters. The week ended contrary to last three days’ brisk activity, as trading volume suddenly slowed considerably, and prices also moved further down. The under tone was easy amid uncertain outlook. The downward trend pressure began in line with cotton futures dropping which was influenced by USDA’s report of bigger crop and falling export orders for US cotton. The Karachi Cotton Association gained early in the week but fell later and official spot rates was pegged at a roll over on the week.

Meanwhile, cotton production is estimated to be lower according to the Cotton Crop Assessment Committee. According to initial estimates, crop output was estimated at 10.84 million bales as against the targets of 14.37 million bales. However, initial estimates and figures of output may improve in second and third estimation as the weather was dry and pest attack was not yet reported.

In India, spot cotton prices ruled in a narrow range as the INR was reversing from all-time lows and the arrival of new crop was around the corner. As a result, spot prices came under pressure, but the downside was limited by high support price and ongoing trade war between the US and China.

Cotton yarn

The cotton yarn market moved to stable in China and prices rolled over on the week. Demand for 32s and 21s improved slightly, while other specs saw lackluster demand. Markets saw moderate transactions although the number of orders grew slightly, while participants held weak confidence on the future. 32s cotton yarn prices were almost steady at 24.30 yuan a kg (US$3.55 a kg), while 40s were at 25.30 yuan a kg (US$3.70 a kg). Coarser yarn prices of 16s were stable at 15.60 yuan a kg (US$2.28 a kg) and 21s at 19.60 yuan a kg (US$2.87 a kg). All quotes were down US cent 1 due to the weak yuan.

In Pakistan, cotton yarn prices were stable after a drop last week, both in domestic and export markets, despite sluggish cotton fibre market in recent weeks. In India, cotton yarn prices remained unchanged as cotton prices moved in different directions. In also reflects weak demand both in domestic and export market amid upheavals in currency rates. 30s carded prices in Karachi remained unchanged at PakRs168-170 per pound (US$3.01-3.04 a kg), while 32s combed in Faisalabad were stable at PakRs174-184 per pound (US$3.1-3.29 a kg).

In India, 30s combed cotton yarn for knitting rolled over at INR220 a kg (US$3.06 a kg) in Ludhiana.