Business activities have remained subdued on the international cotton market in the last week, as participants were waiting for the first data from the US Department of Agriculture (USDA) in two months. The market should stay stable until the end of US-China trade negotiations, due before March 2nd.
The international cotton market has stayed relatively quiet in the last week, with participants waiting for the end of Chinese holidays, the result of US-China negotiations and the first data in two months from the US Department of Agriculture (USDA) after the longest US government shutdown on record.
New York has declined more than 1 cent with the nearby contract ending the week at 72.56 cents per lb.
The current weakness is mostly due to a long-term withdrawal by financial funds, no more betting on a rebound of the market.
The first monthly report by the USDA since December has slightly changed data, eventually raising ending stocks, which could slightly depress prices in the coming period.
The market is expected staying stuck between 72.5 and 74.5 cents until the end of the US-China discussions, with the US deadline on March 2nd now looming.
External factors will prevail amid limiting volatility, like the level of the dollar and the trend on crude oil market.
International trade is expected to stay strong however, thanks to rising demand from Vietnam, Bangladesh and Pakistan.
Vietnam has now become the largest destination of US cotton exports after China has slapped 25% additional duties on US shipments by early July.
Brazil has replaced US exporters thanks to a rapidly rising production in two states of Bahia and Mato Grosso.
According to the USDA, Brazilian cotton exports have reached a record level, as a result.
Demand for Australian cotton may remain strong but production is expected sharply falling over drought concerns.
In India, cotton prices are sliding over a lack of demand although daily arrivals are now falling.
Imports from Pakistan have surged after being eased by the government to offset a new cotton deficit this season.
Domestic prices have slightly declined as a result.
Source: Emergingtextiles
