Mixed movement in global cotton benchmarks over past month: Cotton Inc

Prices for the December NY/ICE 2023 contract, reflecting market expectations for the 2023-24 crop year, have followed a gentle upward trend defined by a series of higher lows. That trend pulled prices up from 75 cents/lb in early November to values over 80 cents/lb, Cotton Inc said in its Cotton Market Fundamentals & Price Outlook January 2023.

The A Index was stable over the past month, holding to levels near 100 cents/lb. Chinese prices represented by the China Cotton Index (CC 3128B) increased slightly in early January, from 97 to 101 cents/lb. In terms of RMB/ton, values rose from 14,900 to 15,200. The RMB strengthened against the US dollar over the past month, from 6.98 to 6.78 RMB/USD.

Indian spot prices (Shankar-6 quality) decreased over the past month, easing from 103 to 97 cents/lb. In terms of INR/candy, values decreased from ₹67,000 and ₹62,000. The INR was steady near ₹82 per USD over the past month.

Pakistani prices increased from 89 to 106 cents/lb. In domestic terms, prices rose from 16,500 to 20,000 PKR/maund. The PKR weakened against the dollar, from 224 to 228 PKR/USD over the past month.

The latest USDA report featured decreases to global cotton production (-332,000 bales, from 115.7 to 115.4 million) and mill-use estimates (-846,000 bales, from 111.7 to 110.9 million bales).  Beginning stocks were lowered 100,000 bales (to 85.3 million), and the net result for world ending stocks was a +372,000 bale addition. If the currently predicted volume of 89.9 million bales is reached, it will represent the second-highest volume of global warehoused supply since China stopped drawing down its reserves in 2015-16 (only behind the 98.4 million bales in 2019-20 with the onset of COVID).

At the country-level, the largest updates to production figures were for the US (+438,000 bales to 14.7 million), Brazil (+300,000 bales to 13.3 million), and India (-1.0 million bales to 26.5 million). For mill-use, the largest revisions were for India (-500,000 bales to 22.5 million), Indonesia (-250,000 bales to 2.2 million), and Vietnam (-100,000 bales to 6.4 million).

The global trade forecast was lowered by 645,000 bales to 41.6 million. In terms of imports, the largest changes were for China (-250,000 to 7.8 million), Indonesia (-250,000 bales to 2.2 million), and Vietnam (-100,000 bales to 6.4 million). In terms of exports, the largest changes were for India (-250,000 bales to 3.1 million) and the US (-250,000 bales to 12.0 million).

ALCHEMPro News Desk (KD)