The market continued to move sideways over the week, before finishing strong at 94.07 c/lb on Dec. 

The market is in slight limbo as it tackles a strong fundamental position against some perhaps more negative news on a global perspective. The US economy added only 230k jobs in August in comparison to the 1 million added in July as COVID restrictions continue to bite. China’s economy is also stalling as they tackle the delta variant with manufacturing activity falling to the slowest rate since the beginning of the pandemic in January 2020. 

In face of some global headwinds, cotton analysts remain bullish on where prices might head to. On call unfixed sales are now at over 15 million bales, and this will act as a very strong resistance to any moves lower. Demand remains strong across the majority markets only fueling the bullish sentiment. 

In Pakistan news came last week that the PCCA are expecting a crop of 8.6 million bales for the current season. This was backed up by the arrival figures of 1.7 million bales by beginning of September, at the same time last year arrivals were at 1 million bales. This number certainly surprised the local market and prices fell nearly 4 c/lb over the week. Demand for nearby shipments has all but dried up, however for new crop WAF there has been business taking place. 

Last week India also showed positive signs, from the three months until the end of June the economy grew by 20.1%, during the same period last year it shrank 24%. The spinners continue to report good activity and profits and some reports suggest consumption of cotton in India could be closer to 34 million local bales. There are no real crop concerns, especially as Gujarat is due some needed rains over the coming days. With a crop at 36 million, consumption at 34 and exports at 3-4 million bales, it could get tight in India next year. 500k farmers from Uttar Pradesh have once again taken to the streets to rally against the Indian Government hoping to repeal the new farm laws, we shall see if these rallies pop up further across India. 

Bangladesh remains quiet, as does Vietnam where mills in the South are working at only 30% capacity to comply with strict COVID protocols. In Bangladesh the strict lockdown is over but enquiry has been lacking, some new crop WAF business is taking place on call but nothing significant. In China the amount offered at the state auctions has increased from 9k mt to 15k mt. Today at auction all 15k mt offered was all sold at an average price of 118 c/lb. 

Demand is certainly there for prompt/afloat, the issue is that there is very little available. We have seen some first rates for Q4 from one shipping line. The price for a container from Abidjan to Chittagong has increased by 70% and the rate from Abidjan to Karachi has increased by nearly 160%. Seems amazing that the service has got worse whilst the prices move higher. Mills question why the basis is so strong for new crop, part of the answer lies therein. 

The WASDE of September be under scrutiny, especially as many are expecting adjustments upwards to the US crop size. Predicting the WASDE numbers is becoming a game fraught with dangers however. It is likely that up until that report the market will continue to drift in the 92 – 94 c/lb range before possibly looking for a rebound.