Cotton prices dropped across markets, Indian slower
Cotton prices dropped across major origin by 0.6-2.2% day on day (30 January) on the international markets. Indian cotton prices fell slower by 0.6% among the major origins to US cents 88.25 per pound CNF China, while the highest fall was Brazil origin cotton to US cents 88.90 per pound. Australian cotton prices fall was a tad lower at 2.1% at US cents 94.55 per pound. However, they were 4-9% higher compared to their levels a year ago.
The US March contract closed the day at US cents 77.03 per pound while May was at US$ cents 77.97 per pound, both falling on follow through selling. The selling seemed to be mostly long liquidation and started last week end with the weak export sales report from USDA. Some selling also came on the stronger US$ as many see it might have bottomed. The weekly sales of Upland Cotton were several months low, and that provided a fundamental reason to sell futures. Experts suggest that a bigger correction may be coming as futures could work lower in the short-term to find new demand. Nevertheless, the downside could be limited if the US% keeps falling lower.
African origin cotton was cheaper by US cent 1.50-1.55 day on day averaging US cents 93.25 per pound on 30 January.
In Pakistan, the KCA spot rates were lowered by PakRs100 to PakRs7,400 per maund (37.32 kg), after listless trading conditions on the cotton market and in line with world markets where fresh decline was recorded owing to weaker US$ against basket of currencies. Some buying interest was reported at the lower level as many spinners preferred to cover up their positions amid falling cotton prices.
Although the value-added textile sector has been demanding removal of duty on imported cotton yarn textile spinners are currently in distress facing the challenge of high cotton inventory amid slower cotton yarn off-take in local market.
In India, spot prices moved down INR56-197 per quintal across varieties. Coarser varieties like V-797, Jayadhar and Y-1 were slower in the prices fall while finer DCH-32 saw the highest fall. Benchmark Shankar-6 was traded at INR11,389 a quintal down INR84 on the day.
