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30.11.2017 | Альбина Весина

Seasonal rise in the price of cotton

In the report provided by"Opening Broker", it is reported that world cotton prices in the period from October 9 to November 27, 2017 slightly increased due to seasonal factors that usually support the market after the harvest. At the same time, harvesting in the USA showed a good result in the 2017–2018 season, which led to an increased need for producers to hedge volumes and put pressure on prices.

 

Certified cotton stocks on the New York stock Exchange rose. Nevertheless, about 250 thousand bales of cotton in the United States may remain uncollected due to possible early frosts in Texas. Losses from hurricane activity in Texas are also estimated at about 200 thousand bales of finished cotton, and significant losses of cotton seeds are also noted.


In the USA, a record cotton harvest is expected in the 2017–2018 season, which, according to the November estimate of the USDA, will amount to21.38 million bales. As of the USDA on November 19, 2017, the cotton harvest was harvested by 74% of the area against 66% last year.


Good rates of cotton exports from the USA support the market. From the beginning of the 2017–2018 season to November 16, 2017, exports of medium-fiber cotton from the USA amounted to 9.37 million bales against 6,652 million bales in the same period last season, exports of long-fiber cotton amounted to 438.7 thousand bales against 393.1 thousand bales.

 


According to China National Cotton Reserves Corporation, the quota for cotton imports to China in 2018 was set at the 2017 level of 894 thousand tons. Cotton production in China in the 2017–2018 season is estimated at 5.35 million tons, and consumption will grow to 8.22 million tons. The Chinese government will resume sales of cotton at auctions from the reserve on March 12, 2018 and will offer 30 thousand tons of cotton at daily auctions until the end of August 2018.


Cotton imports to China in October 2017 increased by 89% year-on-year and amounted to 78.13 thousand tons, the main supplies were made from the USA, Australia, Uzbekistan. Imports for 10 months of 2017 increased by 40.5% compared to the same period of 2016 to 983.5 thousand tons. There is also an increase in yarn imports.


According to official data, cotton production in India in the 2017–2018 season may grow by 11.2% compared to last season to 37.5 million bales amid the expansion of acreage, exports are estimated at 6.3 million bales, consumption at 32 million;kip. The main buyers of Indian cotton are Pakistan, Bangladesh, China and Vietnam.


The November report of the USDA came out positive to the market, showing a significant decrease in the world's cotton stocks at the end of the 2017-2018 season to 19.80 million tons, as well as lowering the ratio of stocks to consumption to 76%. At the same time, cotton stocks in the USA at the end of the 2017–2018 season will grow by an estimated 5.2%.


According to ICAC's November data, the rolling stocks of cotton in the 2017–2018 season will grow to 18.70million tons, but the ratio of stocks to consumption will be 74.1%.The Association also expects a 10% increase in world production with a 3% increase in world consumption.

The renewed growth in global cotton production puts pressure on prices in the 2017–2018 season. Support for the cotton market may come from an increase in oil prices, which has a negative impact on manufacturers of artificial fiber fabrics, the ongoing reduction in cotton stocks in China and a possible decline in the quality of cotton in the United States.

 

Source: < span style="color: rgb(128, 128, 128);">& "Opening Broker"

Photo: shutterstock.com

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