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Most global cotton benchmarks move higher over past month: Cotton Inc

16 Aug '23

2 min read

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Insights

Over the past month, most global cotton benchmarks have risen, including the NY/ICE December contract and the A Index.
Indian and Chinese prices saw an upward trend, while Pakistani prices remained stable in international terms.
The USDA reported a decrease in global cotton production for 2023-24 and noted a slight increase in world mill use.

Most global cotton benchmarks moved up over the past month. The NY/ICE December contract pushed through resistance near 82 cents/lb around the middle of July. With the USDAS’ reduction to its US production forecast, December prices climbed to levels near 90 cents/lb, according to Cotton Incorporated.

The A Index also shifted higher around the middle of July. Values rose from 91 to 97 cents/lb over the past month. After a pause, Chinese prices (China Cotton Index or CC 3128B) resumed their upward trend last month. In international terms, values increased from 110 to 114 cents/lb. In domestic terms, prices rose from 17,400 to 18,100 RMB/ton. The RMB was relatively steady against the dollar, near 7.20 RMB/USD, Cotton Inc said in Cotton Market Fundamentals & Price Outlook - August 2023.

Indian spot prices (Shankar-6 quality) increased from 86 to 92 cents/lb over the past month. Domestic prices climbed from ₹55,500 to 60,000 per candy. The INR held near ₹82 per USD.

Pakistani prices were stable in international terms, holding near 75 cents/lb. In domestic terms, prices increased from 17,000 to 17,800 PKR/maund. The Pakistani rupee weakened from 279 to 288 PKR/USD.

The latest USDA report revealed a drop in the global cotton production forecast for 2023-24 by 2.7 million bales and a slight increase in world mill-use. The US saw the largest production revision, a decrease of 2.5 million bales. Notable mill-use updates were made for China, Turkiye, Indonesia, and Uzbekistan. The global trade forecast was raised by 395,000 bales. Warehoused supply at the end of 2023-24 is expected to be 91.6 million bales, above 90 million for only the sixth time.

In August, the USDA often changes the agency responsible for the US production forecast, leading to significant alterations in crop projections. This month’s revision (-2.5 million bales or -15 per cent) is similar to last year's. Conditions in West Texas and the US could still change. Positive surprises in US GDP growth and strong labour markets have contributed to price gains, but rising interest rates may restrain economic activity, Cotton Inc added.

China's stimulus measures might support long-term demand, but short-term demand is sluggish. US export sales data shows slow sales and issues with scant margins and lack of downstream demand in spinning mills. Chinese reserve stock auctions are selling out due to favourable pricing and concerns over the harvest.

Fibre2Fashion News Desk (KD)

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