Global Cotton Prices On The Surge

Market Intelligence

Global Cotton Prices On The Surge

US cotton futures climbed almost more than 5% in the last two weeks of May as July settled at US cents 89.21 per pound, up from US cents 84.62 two weeks ago. December also jumped 8% to close at US cents 86.65 per pound. Thus, the discount to near future narrowed to US cents 2.56.

The Cotlook A index also gained 2% during the period to US cents 94.95 per pound, after rallying in the fourth week.

In China, all the cotton offered at their auction of state reserves this week stood sold, totaling 150,011 million ton. Meanwhile, volatile cotton futures in Zhengzhou Commodity Exchange contributed to insipid trading in cotton spot market, with players mostly eyeing on state-reserved or resold materials. State-reserved Xinjiang-origin materials in Hubei were quoted at 15.20-15.30 Yuan per kg (US cents 108-109 per pound. The China Cotton Index surged 518 Yuan to 15,696 per metric ton (US cents 114 a pound).

In India, cotton prices continued to surge in line with global trend and were further supported by the expected drop in sowing area. Overall, 6.55 million hectares was sown under various crops so far, which was around 6% than the corresponding period last year. Even though these are early days of sowing and better monsoon may dramatically change the situation, the drop in acreage is substantial in cotton. The planted area has so far is down 30% at 0.78 million hectares under cotton respectively. A substantial reduction is reported in Haryana and Punjab, where early sowing of cotton is normally taken up. Spot cotton prices jumped INR 300-1,300 per candy across specs during the last two weeks. Benchmark Shankar-6 was traded at INR 42,700 per candy, up INR 900 on the fortnight.

Cotton yarn markets were lifted in China, with prices picking up about 2% in line with cotton prices. Some producers raised offers and deals were mainly done at that level without any room for negotiation. Downstream mainly purchased cotton yarn with caution and need based volume. In Shengze, 32s cotton yarn prices jumped to 23.80 Yuan per kg (USD 3.73 per kg, up US cents 7) while 40s were lifted to 24.80 Yuan per kg (USD 3.88 per kg, up US cents 7). In India, cotton yarn prices went stable in line with strongly growing cotton prices. 30s combed cotton yarn for knitting remained unchanged at INR195 per kg (USD 2.86, down US cents 4 due to weak INR) in Ludhiana.