Cotton prices sharply rebonded in the past week as a result of speculative buying in New York and growing demand in Pakistan and China. Prices were back to the level reached by the end of October although not yet at the 80-cent high of mid-October. .
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US futures rallied in the past week with key March closing at 75.07 cents on Wednesday, before the new year long weekend. .
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March rose nearly 5 US cents between December 22nd and December 31st. This sharp increase is mainly due to rumors of a return of Chinese buyers to the US market. .
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The nearby contract was up 6.33% or more than 400 points in only three trading days.According to rumors, China would imminently release its 2004 quotas that Chinese buyers need for importing cotton at very low tariffs. The continued fall in the US dollar is also expected boosting sales of US cotton. .
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US nearby contract began soaring in September. After the 75-cent level was reached on October 17th for the first time this season, prices continued rising to a high of 82.73 cents per pound on October 29th. .
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Key contract later fell to between 68 to 70 cents by mid-December before rebounding from December 18th. .
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Cotton prices were last year boosted by much stronger demand from China. Prices also soared in the past week on physical markets, being up between 100 and 200 points. The benchmark Cotlook A Index reached 75.20 cents per pound on December 31st, up 165 points or 2.24% from previous Friday but only rising 0.13% in the previous four-week period. .
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Resistance is now expected at 75.30 cents, according to experts. The level in prices will be discussed this week at annual Beltwide Conference in the United States. .
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In addition to a sharp increase in prices, US cotton growers benefited from a surge in exports this year partly thanks to stronger demand from China. .
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Accumulated exports reached 3.21 million US running bales in the season to date, up 11.11% from the same period of previous season. Shipments sharply rose by the end of November following a surge in sales in the previous weeks.Cotton prices also rebounded in the past week in China as a result of New York rally and of stronger demand from domestic processors. .
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Spinners are actually accumulating stocks ahead of the coming holidays for the Chinese new year. Average price of 328 grade rose about 100 yuan per ton in the past week to between 17,600 and 17,700 yuan per ton. .
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Prices continued rising on Monday on China National Cotton Exchange, up between 105 and 145 yuan per ton depending on types.Prices rallied in Pakistan in line with the new level in US futures. New reports of lower production emerged in the past week with cotton ginners announcing a crop of about 9.5 million Pakistani bales of 170 kilos each. .
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Continued lack of good quality cotton and lower stocks led to a rebound in demand from spinners. Prices were up 200 rupees per maund of 37.32 kilos with official spot rate by Karachi Cotton Association reaching 3,325 rupees on Saturday. .
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The high level in cotton imports could limit any further rise in domestic prices, however. Pakistani textile industry would have already ordered about 700,000 to 750,000 bales (170 kilos each) while total imports could be about 950,000 bales this season. .
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In addition to cotton from the United States, Western Africa and Central Asia, Pakistani processors are ordering Indian cotton for the first time in years. Indian qualities, mainly Shankar-6 and Bunny, are being shipped by boat to Karachi.

Prices further rose in Turkey with demand from textile industry being expected rebounding this month. Standard-1 Average price was up 50,000 lira to 2,475,000 lira in the week ending December 31st.

Date:1/7/2004

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