New York futures clearly declined in the past week, with active March 03 falling about 2.20% to close at 71.49 cents. .
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After rising at the beginning of the week, the A Index finally decreased to 73.50 cents, in line with New York. .
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US speculators were actually disappointed by the relatively low level of US cotton sales to China in the week ending November 27. .
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According to the US Department of Agriculture (USDA), sales to China were limited to 89,800 US running bales while total US sales only were 323,000 RBs, against trade expectations of 500,000 to 800,000 RBs. Following the recent fall in cotton prices, New York expected a surge in orders from China, possibly reaching 1 million RBs in the week. .
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US funds will now impatiently wait for Thursday new monthly report by USDA, adjusting its estimates of China production and imports in the current season. .
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International cotton prices are heavily dependent on the level in China buying. .
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Depending on USDA report, prices may rebound or further fall by the end of the week. .
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The current lack of cotton should result in higher prices, a series of experts reiterated in the past week although they were more prudent, considering the recent volatility in US futures. .
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Cotton shortages could also depress textile demand and production, as already observed in China and Pakistan. .
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As a result, average prices would finally be lower in 2003-2004 (August-July) than expected a month ago, according to the International Cotton Advisory Committee (ICAC).”Due to higher prices, world consumption of cotton outside China is expected to stumble from 14.6 million tons last season to 14.2 million tons in 2003/04,” ICAC explained in its monthly report. .
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Global consumption was finally lowered to 20.68 million tons or 0.53% less than predicted last month and 1.36% under last season level. .
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Although production is now expected rising 5.25% this season, the global output would not exceed consumption and ending stocks would further decline 4.77%. .
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Averaged A Index would be only 65 cents per pound, after reaching 72.56 cents in October and 76.77 cents in November.
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In the coming season in addition, average A Index would further decline to 53 cents after production will have been boosted by this season higher prices. .
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After reaching historical low of 37.12 cents in October 2001, the A Index steadily rose to more than 60 cents by the end of last season before dramatically surging in October.In China, prices further fell about 200 yuan per ton (1 cent per pound) in the past week. Although cotton costs are progressively decreasing, demand from textile mills is far from rebounding. .
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Cotton consumers are possibly waiting for a new fall in prices in the coming weeks. Average price is still about 93 cents per pound in China or 20 cents higher. .
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Rather than accumulating losses, China textile industry reduced its production in the past month.Prices also continued declining in India where textile buyers are expecting a new decrease in the short term. The second part of India cotton crop should arrive on markets in the coming weeks, further depressing prices. .
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Yarn makers were far from covering their annual needs in the past two weeks as they usually do in this part of the year, only buying cotton for their day-to-day consumption.
In Pakistan, prices were unchanged, according to Karachi Cotton Association. A new rise in cotton prices is actually expected after ginners reported a decrease in arrivals of raw cotton, compared with the same period last year. .
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Pakistani output could be between 9 and 10 million local bales of 170 kilos, much below the expected use by domestic mills.
Date:12/11/2003
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