The market was again relatively subdued over the week with December settling at 65.82 c/lb, down just 13 points.
The biggest news of the week was President Trump being admitted to hospital after testing positive for the Coronavirus. This obviously throws the election as well as much else into the air.
It is generally considered that markets and the economy are well supported with President Trump in office. The US economy and the cotton market have been closely correlated over the course of this year, the election might help us to understand the future direction of cotton prices.
The news from the weekend was that The Republicans and The Democrats may come to a deal on a Covid-19 stimulus package. The house could be called back to vote on such a huge bill, which would be very important for the US economy as well as the cotton market.
Supporting the market again today is the appearance of yet another storm in the Gulf Of Mexico, with the potential for it to turn into a category one Hurricane. Storm Sally hit crops hard in the south, with reports of damage to cotton crops. With the season now further along, a new storm could instead have repercussions for the qualities in those states affected.
For cheaper priced cottons we saw some better demand last week, from various markets. This was also evident in the USDA sales report which for once was dominated by Turkey as the top buyer in what was another strong week of sales for US cotton. We have seen Pakistan remaining as aggressive buyers of Brazil cotton for medium to lower grades. Arrivals of local cotton in Pakistan are down by one million local bales year on year.
In other markets not much activity was reported. In Bangladesh the industry continues to fight for LC’s and to have credit lines renewed, although some sales of CCI cotton as well as WAF have been reported. Indian mills have been buying CCI cotton who have slowed down on their sales to merchants, with current stocks sitting at around 1 million mt of cotton. India is again gearing up for another large crop, which should again be supported by the CCI as the MSP (Minimum Sale Price) is currently way above what the market could pay.
The market continues to be stuck in a sideways motion. Underneath the market is a large on call position built up by the mills, which is acting as a support at around the 64 c/lb level. The market has also been well supported by speculators and index funds continuing to go long of cotton. With all this said, we have some potentially volatile events approaching and would therefore remain cautious on future direction of NYF prices.
Πηγή: Mambo