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Cotton Prices, Both Domestic And Global To Stay Strong

• By  Textile Excellence
• June 14, 2017

Cotton

India’s local cotton prices remained nearly stable during first half of June. While there were minor price changes across varieties, cotton prices remained strong throughout the fortnight.  The demand for good quality fiber has been strong while supply of fiber has improved in general. It is learnt from the traders that many import contracts (by India) have been cancelled as availability has improved and international prices spiked during middle of May. Pundits have estimated that total arrival of cotton for the 2016-17 season has recorded at 32.1 million bales (of 170 kg) which is higher than previous seasons. On the other hand, cotton sowing has started in northern states and as monsoon has arrived in time, India’s cotton production is expected to soar in the 2017-18 season too. In the price front, current domestic price for benchmark Shankar-6 variety is around Rs. 42700 per candy (355.6kg, on 12^th June 2017) which is lower by just Rs 200 per candy if compared to May end prices.

On the global front, cotton prices witnessed volatility but remained strong. The stock availability outside China is expected to reach a record level backed by bumper crop production in 2017-18 season. This has a dampening effect on the fiber prices while China’s import quota for the next year are yet not announced (leaving space for speculation). Also, the gap between the fiber production and consumption has been reduced for the coming season. This month’s USDA forecast for the 2017-18 cotton season indicates substantial increase in production and consumption of the fiber. USDA’s forecast for upcoming season indicates that world cotton production to be at 114.7 million bales up from current seasons’ estimates of 106 million bales (of 480 lb). Consumption estimates increased to 116.5 million bales from current seasons’ 113.6 million bales while ending stock to decline to 87.7 million bales (from current seasons’ 89.3 million bales.

To look at the price trend, ‘A’ index witnessed some fluctuations and declined towards the yearly average. The index touched this seasons’ high of 94.9 US cents per pound on 15^th May and then declined to 87.10 US cents per pound towards May end (26^th May). ‘A’ index was at 86.25 US cents on 12^th June 2017. Historically, ‘A’ Index was at 78.55 US Cents in December 2016 end and was at 69.55 US cents per pound in December 2015 end.

On the yarn front, cotton yarn prices continue to remain strong backed by higher cotton prices. However, some sellers have revised the yarn prices to boost sales. Demand for cotton yarn has been healthy and may continue for some time.

Cotlook ‘A’ Index:  86.25 (As on 12^th June 2017)

Textile Excellence