Cotton prices have sharply declined at the start of last week, over bearish data from the US Department of Agriculture (USDA) and an overall drop of commodity prices. Fiber use could be depressed by the global economic slowdown and falling apparel retail sales in the United States and in Europe.
Cotton futures have eventually plunged on last Monday In New York, over a rise in ending stocks forecast by the US Department of Agriculture (USDA) in its first monthly update since December.
Financial funds have clearly liquidated their long positions and the nearby contract has fallen below 70 cents per lb on Tuesday before slowly regaining ground in the following days.
The same March contract has eventually lost 2.33 cents or 3.2% over the week, ending slightly above 70 cents on Friday.
New York has actually been depressed by an overall fall of commodity prices triggered by a stronger dollar in the current period and also due to the economic slowdown which is expected depressing demand for cotton fibers.
Retail apparel sales have recorded their worst results in nearly a decade on both UK and US markets. Although surging online sales could be underestimated, cotton consumption should be negatively affected by the lack of demand.
The cotton market is also waiting for the end of the US-China trade negotiations which could be postponed beyond initial deadline on March 1st.
In China, the textile industry is very slow in returning to full work, with everyone waiting for clear signs of coming trends.
The fall of international cotton prices is resulting in a possible rebound of imports from various origins, as domestic prices are no more moving and import quotas are being released, allowing to apply tariffs at 1% instead of 40%.
Foreign cotton is therefore becoming more attractive than Chinese cotton, as far as specific grades are concerned.
In India, cotton prices have continued slightly falling in line with relatively disappointing demand from domestic and foreign markets.
In Pakistan, the benchmark indicator is stuck at its new level at 8,600 rupees per maund, thanks to the lack of supply in the contry and whatever the surge of cotton imports in the current period.
Sources: Emergingtextiles
