NY/ICE contracts continued their pattern of swinging back and forth within the limits of their recent ranges. After climbing over 85 cents/lb in mid-April, the July futures contract collapsed to values below 80 cents/lb before the end of the month. Prices rallied in early May to 84 cents/lb before once again dropping below 80 cents/lb and then recovering to reach the current values near 81 cents/lb, as per a report by Cotton Inc.
Prices for the December figures contract (reflective of market expectations after the onset of the 2023-24 harvest) followed a similar pattern. Current values are also near 81 cents/lb. The A Index decreased and partially recovered over the past month. Values began the period near 96 cents/lb, fell as low as 91 cents/lb, and then climbed to 93 cents/lb, according to Cotton Inc’s Cotton Market Fundamentals & Price Outlook May 2023.
Chinese prices, represented by the China Cotton Index (CC 3128B), increased. Prices rose from 102 to 107 cents/lb between early April and May. In domestic terms, prices rose from 15,000 to 16,300 RMB/ton. The RMB weakened against the dollar, from 6.88 to 6.94 RMB/USD.
Indian spot prices (Shankar-6 quality) eased from 97 to 94 cents/lb over the past month. In domestic terms, prices decreased from Rs. 63,000 to Rs. 60,700 per candy. The INR was steady against the dollar, holding near Rs. 82 per USD.
Pakistani prices were near 82 cents/lb one month ago but traded above 85 cents/lb for most of the past month. More recently, prices had fallen back to 82 cents/lb. In domestic terms, prices held near 20,000 PKR/maund for most of the past month. The Pakistani rupee weakened from 285 to 295 PKR/USD from early April to early May.
In May, the USDA released its supply and demand estimates for the upcoming crop year. The report shows a slight decrease in cotton production and a significant increase in global mill-use. Global ending stocks are expected to remain almost unchanged.
The main changes in production at the country level include a decrease in China’s production, a decrease in Turkiye’s production, an increase in India’s production, an increase in the US’ production, and an increase in Pakistan’s production.
Regarding mill-use, India, China, and Pakistan are expected to have the largest increases. India is projected to see the highest increase in mill-use.
Global cotton trade is forecast to expand, with increases in both imports and exports. China, Bangladesh, and Vietnam are expected to have the largest increases in imports, while Brazil, India, and the US are forecast to have the largest increases in exports.
