According to the latest WASDE report, global forecasts for cotton in 2018-19 were lower production and consumption, higher trade, and slightly higher ending stocks compared with its previous month’s estimation. Production is 645,000 bales lower with smaller crops in Pakistan, China, India, Turkmenistan, and Turkey. These changes more than offset a one million bale increase in Brazil and smaller increases in the US and Cote d’Ivoire. Consumption is 1.3 million bales lower largely due to a one million bale decline for China, but consumption is also lower in Pakistan, Turkey, and Uzbekistan. Global trade is 600,000 bales higher, with imports up in Pakistan, India, and Malaysia, while exports are higher from Brazil, Argentina, Cote d’Ivoire, India and Uzbekistan. Global ending stocks are projected nearly 600,000 bales higher, but at 73.2 million bales were down 7.3 million bales from the year ago. On the ICE, the front month active March edged down US cents 0.63 or 0.8% week on week to close at US cents 79.60 per pound.
Global spot benchmark, the Cotlook A index, inched up US cent 0.50 week on week to close at US cents 87.75 per pound, after losing US cents 0.50 on the weekend.
In China, spot cotton market extended weakness, and trades were thin. Prices for domestic grade-3 white cotton were at 14.50-14.60 Yuan a kg (US cents 96 per pound), self-lifting. Downstream buying was thin. Spot markets are likely to extend weakness in the coming weeks. The China Cotton Index inched up this week by 9 Yuan, to close at 15,411 a ton (US cents 102 a pound).
In Pakistan, cotton trading was moderate this week on back of demand for fine and second grade lint besides buyers made forward deals in all grades that kept cotton market in firm zone. The KCA kept making adjustments in spot rate that stayed at PakRs8,960 per maund ex-Karachi. Trading in Punjab and Sindh remained grade issue on account of demand from leading buyers besides production of lint remained moderate in major ginning units in the country. The physical prices of all grades were on firm footing as demand for fabric and yarn was on higher side from the buyers of these commodities.
In India, spot cotton prices continued to moderate as arrivals gained pace. Prices of finer variety cotton like MCU-5, Surabhi and DCH-23 fell INR200-300, while coarser varieties such as Bengal Deshi and Y-1 lost INR100-300 per candy. However, benchmark Gujarat Shankar-6 was traded at INR44,400 per candy (US cents 78.97 per pound), up INR100 from last week. Unfavourable weather condition led the Cotton Association of India to reduce crop estimates for Gujarat by 3 lakh bales, Maharashtra by 1 lakh bales and Telangana by 1.5 lakh bales. At the start of the cotton year 2018-19 (October-September) delay in harvesting and concerns about output amid scanty rains kept cotton prices higher. In November, prices fell due to poor exports and an increase in arrivals, after Diwali. However, prices are likely to bounce considering the latest estimates of CAI regarding the 2018-19 crop.
Cotton yarn
Cotton yarn prices were seen moderating in China but held steady in Pakistan and India this week. In China, cotton spot market extended weakness, resulting in cotton yarn market seeing limited transaction. Prices of individual varieties moved down further, while demand for cotton yarn 32s and 40s was relatively better. In Pakistan, yarn buyers were seeing demanding regular volumes as fabric makers operated at normal rate with no boost seen in near future. In India, cotton prices were moderating prompting yarn makers to maintain their price levels. Weak INR also pegged values down on the week.
In China, 32s cotton yarn prices fell to 23.30 Yuan a kg (US$3.39 a kg), while 40s fell to 24.40 Yuan a kg (US$3.55 a kg), both down US cents 2). Coarser yarn prices of 16s were stable at 14.60 Yuan a kg (US$2.12 a kg) while 21s moderated to 18.50 Yuan a kg (US$2.69 a kg, down US cents 3). In Pakistan, 30s carded prices in Karachi rolled over at PakRs175-180 per pound (US$2.76-2.84 a kg), while 32s cone in Faisalabad were steady at PakRs172-180 per pound (US$2.71-2.84). In India, 30s carded cotton yarn for knitting remained unchanged at INR230 a kg (US$3.21 a kg, down US cents 5 due to weak INR) in Coimbatore while export offers were flat at US$2.88 a kg.
