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Global cotton benchmark prices collapsed over past month: Cotton Inc

15 Jul '22
3 min read
Pic: Shutterstock
Pic: Shutterstock

Before expiring, the July NY/ICE futures contract lost 30 per cent of its value in just a couple days, falling from 144 cents/lb on June 22 to 100 cents/lb by June 24. The timeframe for the collapse in December NY/ICE futures was slightly longer, from June 17 to July 6. During that time, December futures dropped by 25 per cent from 120 to 90 cents/lb. 

The NY/ICE market continues to be volatile, with prices for December locking on the limit decrease on the day the USDA report was released (July 12), Cotton Incorporated said in its Cotton Market Fundamentals & Price Outlook July 2022.

Similar to NY/ICE futures, there have been two price series for the A Index to watch during this period of transition from the 2021-22 to the 2022-23 crop year. Values for the 2021-22 version of the A Index fell from 161 cents/lb on June 21 to below 130 cents/lb by July 7 (-19 per cent).  Values for the 2022-23 version of the A Index, referred to as the Forward A Index, fell from 125 cents/lb on June 23 to 106 cents/lb on July 7 (-15 per cent).

The China Cotton Index (CC 3128B) has been losing value for several months (peak values near 164 cents/lb were last touched in March) but losses accelerated in June. From a level near 143 cents/lb on June 15, values dipped to readings below 120 cents/lb by July 12 (-16 per cent).  In domestic terms, the CC Index fell from 21,150 to 17,600 RMB/ton between June 15 and July 12 (-17 per cent).  The RMB was relatively stable against the dollar over the past month, near 6.70 RMB/USD.

Indian spot prices (Shankar-6 quality) decreased from 164 to 142 cents/lb between June 17 and July 12 (-13 per cent). In domestic terms, the drop was from ₹100,000 to ₹85,000 per candy of 356 kg each (-15 per cent). The INR weakened marginally against the USD, from ₹78-79 per USD.

Pakistani spot prices began decreasing in early June. From levels near 139 cents/lb, they have fallen to those 94 cents/lb in the latest trading (-32 per cent). In domestic terms, prices fell from 22,500 at the start of June to 16,000 PKR/maund (37.32 kg) recently (-29 per cent).  The PKR weakened from 198 to 207 PKR/USD between early June and the present.

The latest USDA report featured reductions to figures for both world production and mill-use for both the 2021-22 and 2022-23 crop years.  For 2021-22, the global production estimate was lowered 0.7 million bales (to 116.2 million) and global consumption was lowered 1.9 million bales (to 119.8 million).  For 2022-23, the global production forecast was lowered 1.2 million bales (to 120.7 million) and global consumption was lowered 1.6 million bales (to 119.9 million).

With the decreases in use exceeding the declines in production, figures for global ending stocks increased. For 2021-22, the projection rose 1.1 million bales (to 84 million). For 2022-23, the forecast increased 1.6 million bales (to 84.3 million).

The global trade forecast for 2022-23 was lowered 1.1 million bales (to 46.4 million). The most significant changes on the import side included those for China (-500,000 bales to 10 million), Bangladesh (-300,000 bales to 8.5 million), and Vietnam (-300,000 bales to 7.2 million). On the export side, the largest updates included those for the US (-500,000 bales to 14 million) and Australia (+300,000 bales to 6 million).

Fibre2Fashion News Desk (KD)

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