Cotton prices have not really moved in the last week, as market participants continue waiting for the end of China-US trade negotiations. Prices are still expected recovering, over a rebound of Chinese demand for US crop.
The international cotton market remains relatively frozen with limited business activities in the last week.
The conclusion of US-China trade negotiations has apparently been postponed beyond the end of March.
Market participants continue expecting a rebound of cotton prices if China would accept to liberalize its cotton imports.
Whatever the details of a trade agreement between both countries, China will immediately remove its additional tariffs on US cotton imports.
With a current need to replenish state-run inventories, China’s demand for US cotton could rebound and push up prices in New York.
The US futures market has stayed at a relatively same level since the end of lat year, with the May contract for instance remaining somewhere between 72 and 76 cents.
In China, cotton futures have also stayed very stable but domestic prices are clearly expected surging in the coming period, as reflected by the price difference between the March and May contracts having recently jumped (see below chart).
Seasonal trends could also support cotton prices on the international market, with availability of fibers being usually lower in the second quarter of the year.
Demand is currently focusing on US and Australian cotton, but also on Indian crop, which is supporting domestic market prices in India.
Massive buying by state-run CCI (Cotton Corporation of India) is also supporting prices above minimum levels set by the government.
The US Department of Agriculture (USDA) has released its monthly update, with only negligible changes from February (see below tables and charts).
Source: Emergingtextiles
