Cotton prices have further declined in New York, although with very different results depending on contracts. Demand is depressed from spinners on the international and domestic markets with participants waiting for the results of the G8-summit later this week, which should tell if China will resume buying cotton on the international market. Domestic markets are supported by tight supply ahead of the new crop.
Cotton futures have continued last week falling, with the expiring nearby contract losing 4.75 cents per lb at 61.19 cents (-4.75%).
The October contract has only dropped 1.9 cents or 2.8% in the meantime whereas December was even stable, from a week earlier.
Demand remains weak from spinners on the international market. With their activity being currently reduced, they have no reason to accumulate stocks beyond very specific needs.
Domestic markets are however staying very firm, with tight supply at home supporting offers from local merchants.
In China, cotton prices have continued bottoming out in the past week after having heavily declined in May and the first days of June.
In Pakistan, the market indicator has stayed at 8,800 rupees per maund until last Friday, when it has declined 100 rupees, nevertheless.
In India, prices have also been kept unchanged until they have declined on Saturday.
If considering our cotton price comparison charts, the sharp fall of New York futures has not affected prices in India and Pakistan, in local currency terms.
In China, the market has been confronted with larger supplies and a fall of cotton use in the country.
In Pakistan, prices have heavily declined in US$ terms after the rupee has been repeatedly depreciated.
In India, the cotton crop is expected to be larger in the coming season, with cotton sowing being however delayed by a late monsoon.
The result of the G8-summit at the end of the week will tell if cotton prices could now rebound over anticipations of larger buying from China.
Long-term trends should not favor a price recovery, however, due to the low level in cotton use after polyester prices have sharply fallen.