Cotton prices have continued rising in the last week on the international market, being boosted by a rebound of US export sales over stronger demand from China. With the end of trade negotiations being Beijing and Washington now in sight, prices will continue rising, as demand from Bangladesh and Vietnam could rebound.
Cotton prices have continued rising in the past week on the international market, with New York’s nearby contract gaining 0.64 cent per lb or 0.8%.
The December contract reflecting the price in the next season has even climbed by 1.45 cent or 1.9%.
China already buying US cotton
Announcement of sharply higher US export sales in the week ended March 28th, has supported demand from speculative funds.
Net sales have reached 322,100 running bales, up 47% from the previous week.
Demand was originated in Vietnam and Bangladesh, but also in China, as a possible gesture of Chinese goodwill during the current period of trade negotiations with Washington.
China could be committed to buy large quantities of US cotton in exchange for the end of 25% additional tariffs at Chinese borders being applied since last July.
US cotton being currently purchased will probably reach China after the end of negotiations, which are now expected being successfully completed in the coming weeks.
Higher prices in India and Pakistan
Another reason for the current rise of international prices is the lower production level in India and Pakistan boosting imports from other countries.
In Pakistan, the latest report from ginneries indicate a fall of 6.9% in arrivals of raw cotton by April 1st, from the same period last year.
With trade between Pakistan and India being suspended until the end of the electoral period in India, Pakistani importers are shifting to other origins.
On the domestic market, the cotton indicator has been raised from 8,600 to 8,700 rupees per maund of 37.32 kilos.
In India, the production is also expected being significantly lower this season due to erratic rain in the monsoon period.
Cotton prices have continued surging in the last week with benchmark Shankar-6 rising 1,900 rupees per candy or 4.3%, being up 9% in four weeks.
Demand from Vietnam and Bangladesh remains relatively limited in the current period, but the fall of yarn inventories in both countries should trigger a rebound of cotton imports.
Source: Emergingtextiles
