Cotton prices have dramatically fallen in the last week in New York, over a possible failure of China-US trade negotiations and the release by the US Department of Agriculture (USDA) of bearish data for the next season 2019-20.
Cotton prices have plunged in the last week in New York, over difficulties for US negotiators in settling a trade agreement with China and over prospects of a rebound of global cotton production in the next season.
The new nearby contract July 19 has lost 7.2 cents per lb or nearly 10% in a single week.
The same contract has fallen 14.6% from its level a year ago.
December 19 has only declined 5 cents or 6.8%, eventually ending the week above July after being continuously weaker in the last weeks.
The December contract reflects the anticipated price in the next season.
Two major factors have triggered panic selling in New York.
The first one is the US decision to raise additional tariffs from 10% to 25% on a large number of Chinese products, with president Trump accusing Chinese negotiators of having backpedaled in the last weeks.
Cotton prices have been boosted in the last months by anticipations of much larger sales of US cotton to China.
Demand from China is now expected to decline by contrast, although this is actually far from certain.
The second bearish factor has been supplied by the US Department of Agriculture (USDA), Friday releasing its detailed forecast for the next season.
Global production is expected sharply rebounding, after having slightly decreased in 2018-19.
Global use will also recover, although less significantly, with ending stocks slightly declining as a result.
The fall of stocks will be entirely due to a 8.5% decline in China whereas inventories will have surged 4.9% outside China at the end of the 2019-20 season.
Detailed data including, production, use, exports, imports, ending stocks, are fully available in the cotton fundamentals of our price database with statistics being supplied per country.
Source: Emergingtextiles
