Cotton prices surge across major markets on strong demand
Cotton prices surged across major markets in the week ending 13 April due to combination of strong demand, concerns over drought, lack of quality fibre and futures trading sentiment. On the ICE, cotton posted gains on the week, with old crop May and July futures contracts traded within the US cents 83.25-83.45 per pound range and closed above US cents 83. May was impressive as it moved through the long positions (selling May and buying July) and posted gains despite the selling pressure created by rolling positions to the July contract. This suggest that May contract was facing price inversion where immediate demand was the reason for the market to invert.
Global spot benchmark, the Cotlook A index also gained US cent 0.90 on the week at US cents 92.95 per pound, despite some softness on weekend.
In China, 14,000 ton of cotton was sold at auction of state reserves at an average price of US cents 102 per pound equivalent, reports showed. The sale volume represents 46.7% of the cotton available at the auction. This week, cotton spot market made slight downward corrections, with trading appearing insipid. Hand-picked materials from Xinjiang were quoted at US cents 109-112 per pound equivalent.
In Pakistan, trading activity on the cotton market was slow as buyers were unable to get hold of quality cotton. However, prices generally remained firmness due to sustained demand for quality cotton. Fast diminishing stocks with ginners and increasing shortage of quality cotton restricted activity. Brokers indicated that market would keep witnessing slow activity as the current season is set to close. The Karachi Cotton Association spot rates firmed up PakRs200 on the week to US cents 80.40 per pound equivalent, ex-Karachi.
In India, cotton prices continued to move up this week influenced by firming US cotton Futures and lack of quality fibre. Cotton crop was affected by pink boll worm in Maharashtra which resulted in inferior quality and loss of yield. Spot prices were up INR200-700 across specs. Benchmark, Shankar-6 was traded at INR41,400 per candy (US cents 81 per pound), up INR 500 on the week.
Cotton exports jumps as domestic prices recede to sub-80 cents
Source: Global Markets Weekly Review
