The market moved higher over the course of the week to settle at 69.37, up over 70 c/lb.
The market strength came from a variety of outside forces. China cut tariffs on many US agricultural goods, with cotton included in the list. This is all part of the phase one trade deal concluded last month. Although reports vary, the spread of the coronavirus within China appears to be starting to slow, however more cases are now being reported outside of China. It remains that the news on the Coronavirus and its risk of spreading globally is keeping a lid on commodity prices.
The USDA report was delayed this week due to the national holiday. We do feel that sales will however be strong again as US recaps seem to be doing the majority of the selling globally at present. Both the USDA and NCC came out with 2021 planting acreage figures ranging between 12.5 and 13 million acres – using historic abandonment figures this would suggest a lower crop in the region of 19.5 million bales.
On the demand side US and Brazil recaps seem to be catching the attention of the buyers, particularly in Vietnam, Bangladesh and Pakistan. Indian cotton does not seem to be selling as well as it has been, mostly because only the lower qualities are available due to the CCI buying the better grades. Buyers remain interested in West African but are not yet willing to pay the strong basis, especially when the Indian and US remain cheap. These origins will sell out in due course and WAF will be the residual seller of high grades available.
The dollar has continued to strengthen over the week, and has brought a few more West African origin tenders to the market. The CCI continues to buy and now even purchasing from ginners. Their large inventory, now close to 8 million bales, is certainly keeping a cap on prices moving significantly higher in the future.
Although the market has slightly rebounded this week, it is hard to see a scenario where we would quickly head back into the 70’s, esp
Πηγή: Mambo