The focus now moves to the May contract which showed a very small gain in the week to settle at 68.63 c/lb.
The Coronavirus continues to overshadow all markets including our own cotton market. While the virus is primarily affecting China, it remains to be seen what the long term effects will be on the global economy. Internally within China, the restrictions on the day to day workforce have already resulted in cancellations of Indian cotton contracts and there were reported cancellations in this week’s USDA Export Report.
The USDA report was again very positive, with over 300k bales sold in the week and again an excellent shipment figure. The positive report was again not enough to buoy the market as the Coronavirus took centre stage and limited any upturn in price levels.
The surprise this week was the WASDE report which caught a few people off guard. Production was increased by 1.3 million bales, mostly from Brazil and Pakistan while consumption was reduced by the same level, mostly down in China due to Coronavirus fears.
The demand side has been again relatively poor over the week, with the exception of US cotton that continues to sell well in Turkey, Pakistan and Vietnam. There has been small demand from the hand to mouth buyers for West African but at reduced basis levels. Indian cotton continues to be relatively well sold in Bangladesh as prices are only around the 700 on level. Vietnam continues to look for afloat cotton whilst Pakistan is looking for some WAF higher grade longer staples as they are finding hard to procure from the US.
On the origin side, West Africa is offering reduced volumes of 1.1/8” staple and longer, suggesting a potential short supply later in the year. Brazil still has around 400k mt left to sell and these are coming through in recaps, ginners are looking for a firm basis whilst the same quality parameters are traded cheaply from transshipment ports. In India the CCI have now bought 7.5 million bales, and may potential buy up to 10 million bales – this cotton will eventually come back on to the market and if, as believed, the CCI intends to make a profit or at least break even, then the local basis will need to firm quite considerably.
It remains a difficult market to predict as Coronavirus fears seem to be dictatin
Πηγή: Mambo