The market collapsed this week to finish at 62.50 c/lb on May, down 687 points.
Coronavirus has now spread to every continent except Antarctica and the cases continue to rise daily. China itself has seen a slowing in recorded cases but it is the spread outside China which has spooked global and agricultural markets. As governments rush to contain the virus it will no doubt lead to factory closures, weakening global demand for commodities and the potential of a global recession.
The market has become completely unrelated to cotton as even with a relatively strong USDA sales and shipment number the market couldn’t find support. With the market having lost nearly 10 c/lb in the week at the time of writing, traders will be wondering at what level the market might find some support. At this stage it is very hard to say.
The lower market has certainly brought enquiry to the table, though with the market falling so rapidly often enquiries are withdrawn as mills become nervous. Nonetheless those mills that are hand to mouth have been active in Bangladesh, Vietnam and Pakistan. The fear will be what will happen to global consumption with the spread of the virus, China has already reported a slowdown in their consumption but will this perhaps spread to other markets.
The CCI have started to try and auction both old crop and new crop stocks, new crop offerings are currently at around the 82 c/lb mark ex works which obviously mean sales are impossible.
Very difficult to predict where this market might end up, as any movements will be related to containing the virus, or news on a vaccine. Global markets have not been as low as they currently are since the recession of 2008.
Source: Mambo