Attention now turns to the December contract which closed at 59.81 c/lb on Friday, up 78 points in the week. 

As lockdowns ease we saw a spike in retail sales over the month of May, which almost doubled in the US over the May period. This return of demand at the top of the supply chain may hopefully filter down into improved cotton demand. There are however fears that the US could be seeing a second spike in virus cases. The WHO yesterday announced the highest increase of new cases in one day since the start of the pandemic. 

Tensions between China and the US seemed to soften last week, both sides have said they are working towards the phase one trade deal. The US announced that China have so far bought $1 billion of US cotton and that there was a lot more to come. China has so far bought $4.65 Billion worth of US AG products, well behind the $36.5 billion agreed in the Phase One deal. 

Staying with the US, the drought situation in Texas seems to be worsening, the WASDE has production in the US at 19.5 million bales for new crop but this could be drastically lowered if the drought situation does not improve. 

We reported that the CCI have drastically cut their sales price on new and current crop stocks, their price is still above the market and we understand only around 50k bales of business has been done so far from the CCI. Local ginners in India are still around 2 c/lb cheaper than the CCI levels. 

West Africa saw many tenders last week with only Mali having reported sales to merchants for current and new crop at relatively strong basis levels. Brazil on the other hand has seen the basis level continue to fall, ginners there are trying to liquidate current recap stocks but are having difficulty achieving a reasonable price. In Tanzania they confirmed the seed cotton price to the farmer, seeing some ginners come to the market to get some sales on the book. 

Elsewhere, other import markets have remained quiet. Bangladesh has seen some small enquiry for WAF cotton but without a huge amount of business concluded. Pakistan continues to look at very cheap Brazil recaps and Argentinian cotton. As per the USDA sales report it seems that US cotton to China and Vietnam is currently the most traded bale in the market. 

Last week it was reported that ending stocks are set to rise significantly over the course of the next year, the below chart gives you an indication of how high ending stocks affect NYF prices and perhaps an idea of where we are heading on future pricing.