Cotton US futures were down to slightly up this week and trends could continue to turn down once again in this market. Short-term trends were sideways, but long-term trends were down and could remain down as growing conditions and yield projections become more stable and rains enter parts of the western Great Plains.
The improved condition in the USDA reports showing some areas were abandoned, but rains were now being seen in the western and southern Great Plains. US weather remains good in the Delta and Southeast. Players watching the Indian monsoon said the rains are below normal, but generally good enough to support crops. The USDA average price was US cents 77.94 per pound, while certified stocks on the ICE were at 20,154 bales.
US cotton December contract gained US cents 0.24 week-on-week to close at US cents 81.63 per pound. March settled at US cents 81.79 per pound up from US cents 81.71 last week. Nearby October contract settled at US cents 81.81 per pound, up US cents 0.06 on the week.
Global spot benchmark, the Cotlook A Index continued to retreat for the fourth consecutive week. The Index was down US cent 0.35 week-on-week, closing at US cents 91.40 per pound, having lost US cent 0.75 on weekend itself.
In China, the spot cotton market was under correction and prices remained stable, but trading was thin. Mechanically-picked cotton in Xinjiang-based warehouses were quoted at 15.80-16 yuan a kg (US cents 104-106 per pound). Meanwhile, the China Cotton Index inched up 9 yuan, week-on-week, to close at 16,300 a ton (US cents 108 a pound).
In Pakistan, the cotton market was lackluster, as ginning and physical trading activities remained dull during the week-long Eid holidays week. However, leading buyers made fewer deals for a better and second grade of lint on slightly higher prices on shrinking better grades that put price in comfort zone during last two days of the week.
The Karachi Cotton Association (KCA) spot rate rose PakRs100 on the week at PakRs8,260 per maund ex-Karachi amid thin volumes, while spinners made some deals with ginners of Sindh and Punjab on competitive prices. Market sentiments are expected to be positive during the coming week, while ginners withholding fine lint were confident that the price would go up further in the coming days.
In India, cotton prices moved up for coarser varieties by INR200-400 per candy and finer cotton was further cheaper by INR100-500 a candy. Benchmark Gujarat Shankar-6 was traded at INR47,800 a candy, up INR100 from last week.
Reports emerged that India’s cotton export is likely to fall in 2018-19 to 7 million bales, down 30% from an earlier estimate, as scanty rainfall and pink bollworms attack will squeeze crop yields, according to the Cotton Association of India. In Gujarat and Maharashtra, accounting for over half of country’s cotton production, rainfall was lower than normal while some pockets reported pink bollworm attacks. The CAI had predicted exports of 10 million bales in June. Until July 8.3 million bales of cotton were exported during the 2017-18 season (‘Fibre to Yarn Export Statistics’ report). Of this, 70% was exported to Bangladesh, Pakistan and Vietnam. China was another 11% at 9.45 lakh bales.
Coarser cotton yarn improves on good demand
Cotton yarn prices were flat to up this week, reflecting past uptrends in cotton prices, while demand was still modest. In China, a coarser variety of cotton yarns were dearer, while finer counts remained unchanged. This implies that demand was emerging for coarser yarns as prices have moved up for the second consecutive week. In China, 32s cotton yarn prices were flat at 24.10 yuan a kg (US$3.51 a kg) while 40s were at 25.10 yuan a kg (US$3.65 a kg), both up US cent 1 due to weak US$. Coarser yarn price of 10s was up at 14.60 yuan a kg (US$2.12 a kg) and 21s at 19.40 yuan a kg (US$2.82 a kg), both up US cents 2 also due to weak US$.
In Pakistan, activities on the cotton yarn markets in Karachi and Faisalabad were dull due to the week-long Eid holiday. The last two trading days saw prices roll over in both the markets. 30s carded prices in Karachi rolled over at PakRs180-190 per pound (US$3.24-3.42 a kg), while 32s combed in Faisalabad were steady at PakRs186.50-195.50 per pound (US$3.36-3.52 a kg), both up US cents 2.
In India, cotton yarn prices rolled over since cotton prices were sluggish in the past two weeks. However, export prices were down due to the weakening of the INR. Meanwhile, cotton yarn exports surged in July, although from a low base, while realization picked up during the month. 30s combed cotton yarn for knitting was flat at INR220 a kg (US$3.14 a kg) in Ludhiana. Export price for 30s combed were down US cents 4 at US$2.93 per kg.
