Market rose in the face of steep losses in stocks and oil. Plunging polyester prices hurting cotton’s market share, ICAC says. Vietnam reported on pace to replace China as the worldΆs largest cotton importer.

Cotton futures rallied from an early dip to a seven-session high in spot March and finished in the upper quarter of the range on heavy volume Tuesday.

• March settled up 51 points to 62.30 cents, trading within a 101-point range from down 30 points at 61.49 to up 71 points at 62.50 cents. Coming into the session, March had fallen below 61 cents five consecutive days and had closed above that mark three times in a row and four of the five.
• May closed up 45 points to 62.65 cents, July settled up 49 points to 62.88 cents and December finished up 57 points to 62.41 cents.
• The market rallied in the face of steep losses in U.S. equities and oil prices amid heightened concerns about the global economy. Mill fixations ahead of first notice day for March deliveries 15 sessions ahead may have helped to underpin support.
• Volume rose to an estimated 49,288 lots from 40,835 lots the previous session when spreads accounted for 21,289 lots or 52%, EFS 325 lots and EFP 11 lots. Options volume totaled 2,850 calls and 2,828 puts.

Traders took note of an International Cotton Advisory Committee report that polyester prices are hurting cottonΆs market share as manmade fiber prices have continued to drop and widen the discount to cotton prices.

Polyester prices fell to 43 cents in January from 52 cents in August 2015 and averaged 48 cents in the first half of cottonΆs marketing year, ICAC said, while world cotton prices as measured by the Cotlook A Index averaged 70 cents and ranged from 74 to 66 cents.

When cotton prices dropped at the start of 2014-15, the gap between the A Index and polyester prices in China, which accounts for 72% of world polyester production, narrowed significantly and greatly improved cottonΆs competitiveness, the committee added.

That only lasted a few months, however. The ongoing drop in polyester prices during August-January has cut into cottonΆs market share, particularly in China.

Cotton consumption in China is forecast down 5% to 7.1 million metric tons (32.61 million 480-pound bales) in 2015-16, ICAC said, though it remains the worldΆs largest consumer of the natural fiber.

Converted to statistical bales, ICACΆs world cotton consumption estimate is down 1% to 103.16 million. IndiaΆs consumption is expected to increase by 2% to 25.26 million bales and PakistanΆs to decrease by 12% to 10.11 million bales.

Consumption in Turkey, the fourth largest, is projected to remain stable at 6.89 million bales, while mill use in Vietnam and Bangladesh is expected to grow by 22% and 13%, respectively, to 5.05 million bales each.

With consumption down and domestic cotton prices lower, ChinaΆs imports are projected by ICAC to fall by 40% to 4.96 million bales, below USDAΆs forecast of 5.5 million and the lowest in 13 years.

But if ChinaΆs imports remain steady, Vietnam may overtake it as the worldΆs largest cotton importer this season. Imports by Vietnam during the first four months of the marketing year were reported at 1.502 million bales, compared with 1.134 million by China.

Consumption in Vietnam and Bangladesh is increasing steadily owing to lower production costs, but they produce little cotton and must rely on imports to meet demand.

Futures open interest declined 2,851 lots Monday to 195,506, snapping a string of 11 consecutive increases, with MarchΆs down 5,522 lots to 103,901 and MayΆs up 1,362 lots to 47,240. Cert stocks were unchanged at 27,784 bales.