Cotton prices were largely driven by multiple factors across global markets as the commodity captured attention of speculative funds following USDA’s bullish to neutral reports. Prices returned to the previous month’s highs – to a new high, signalling higher prices. The bulls have increasingly been aggressive, as on-call sales also pressured market higher with demand continuing to be the big factor behind the push.
US cotton futures made an appreciable start in March and added 3.9% or US cents 3.18 in the first fortnight to the May contract at US cents 84.52 a pound on the ICE. July contract stood at US cents 84.19 and December at US cents 78.72 per pound.
The tariff on cotton imposed by Turkey could disrupt some trade flows, but the critical shortage of US quality cotton would mean that the solid Turkish market moved out by US traders and would shift to other destination so that export volume is not hurt.
Cotlook A index, the global spot benchmark, gained US cents 5.8% or US cents 5.20 in the first half of March at US cents 94.40 per pound, but after gaining US cents 2.20 at the of the period.
In China, cotton spot prices were mostly flat with hand-picked Xinjiang-origin grade-2128/3128 materials quoted at US cents 112 per pound. The China Cotton Index inched up 25 Yuan to 15,722 per metric ton (US cents 112 a pound).
Indian cotton prices also jumped INR300-700 per candy for some specs and declined INR 300-500 for a few. Shankar variety was traded at INR41,200 per candy up INR1300 on the fortnight.
Cotton yarn market recovered gradually in China but not as expected. Prices were basically unchanged, with discounts slightly down amid moderate transaction. Deals were mainly concluded for 32s and 40s yarns. 32s were traded at US$3.62 a kg, up US cents 2 and 40s were flat at US$3.77 a kg in Shengze.
In India, cotton yarn prices stayed unchanged in the fortnight as cotton prices recovered before dropping. Margins of cotton yarn producers had already recovered when cotton prices moderated and not followed similarly by yarn prices. 30s combed cotton yarn for knitting rolled over at INR200 a kg (US$3.07 a kg) in Ludhiana while export offers were stable at US$3.35 a kg.