This was the week of the deal, on many fronts, spurring December into a rally up 3.57 c/lb in the week closing at 64.99 c/lb on Dec.
China and the US agreed a phase one negotiation to the trade war, it still needs to be signed and further terms finalized but it is a de-escalation and should perhaps bring a bit more confidence to the world markets. Boris Johnson also achieved what looked like the impossible by agreeing a deal that would take the UK out of Europe by 31st October. He now just has to secure the support of Parliament back in the UK on Saturday which could be the hardest part.
So on to cotton, the ICA event finished last week in Liverpool in what was an overall bearish / negative mood amongst the trade. Joe Nicosia concentrated his talk on the effects of the trade war on China and how this has affected their economy and the wider global economy. He also looked at the fall in global consumption from an estimated 128 million bales for 2018/2019 to now 122 million bales, and this very obvious effect on prices.
This was all before the US/China phase one deal which has breathed some life into a somewhat lifeless market. Bangladesh have again been selling yarn at better prices and have returned to the import market for cotton, mostly for nearby lots. Pakistan continue to look at lower grades out of the US and Brazil with reports of good business.
In India they continue to wait for news on their crop, estimates range from a local crop size of 35 to 40 million bales, however the crop is still not in and there some uncertainties. When and how much will the CCI start buying, and how much of an impact will the flooding affect the qualities delivered. All these are unknowns for now and will play a part on imports into India as well as global pricing.
Mills have been shaken by the climb in NYF and brought them to the market for enquiries. A substantial deal between China and the US will only push prices further up and mills are showing a keenness to jump in before prices get much higher. That said, the supply side continues to look very strong so any thought of prices heading past 70 c/lb still looks very far away in our opinion.
Πηγή: Mambo