The market lacked any follow through upward movement this week and ended down 188 points at 60.33 c/lb on December.
It was events outside of cotton that caught the eye this week. Oil prices spiked after an attack on a Saudi oil field. The Fed lowered interest rates by 0.25 points, as was expected. The US and Chinese trade negotiating teams met yesterday though no news has been forthcoming on this yet.
The USDA shipment report was again disappointing though the shipments were slightly improved, it was again the number of cancelations that caught the eye. This has been a common theme this year with many mills being unable to take their high priced contracts and as a result there are renegotiations or defaults taking place.
Market is again incredibly quiet which is not usual for this time of year. Bangladesh is looking for afloat offers of high grade. India has gone quiet again though the possibility of another import window remains as there is talk of a delayed new crop. The rains in India have been good with some crop estimations now at 35 million local bales, the question is whether the MSP will kick in and buy a portion of that new crop.
The move upwards last week based on trade war rumors was never able to hold, and we are back to a situation where there are plenty of cotton stocks globally, some big crops coming and very weak demand.
It remains difficult to see a scenario where prices could climb into the high 60’s at the moment. Everyone is hoping that news from the current US/China trade negotiations will spark a rally but history has told us not to expect too much. It is really the demand side that remains the concern, yarn isn’t selling and mills remain very much on the sidelines.
Source: Mambo