As it turns out, even that was not enough, since China imported 1.29 million bales in July, bringing the seasonal total for 2013/14 to 14.12 million bales, or 0.52 million bales more than the current USDA estimate. This will most likely result in another downward revision of already tight rest of world (ROW) beginning stocks.
New York futures moved higher this week, as December gained 125 points to close at 65.92 cents. So where does the market move from here? Technically #
When comparing the seasonal surplus in the ROW with Chinese imports over the last three seasons, it has been found that China has absorbed all excess cotton from the rest of the world.
In 2011/12, the ROW produced a surplus of 27.52 million bales, of which China imported 24.53 million bales. In 2012/13, the ROW surplus amounted to 17.18 million bales, while China imported 20.33 million bales. In other words, China took all the excess cotton plus over 3 million bales of inventory in 2012/13.
The same happened in the just ended 2013/14-season, when the ROW produced a surplus of 12.35 million bales, but China imported 14.12 million bales, once again absorbing all excess cotton plus nearly 2 million bales of inventory.
Prices have recently collapsed in the belief that Chinese imports will finally slow down to a trickle, allowing ROW inventories to grow. The current USDA numbers foresee a ROW surplus of 12.04 million bales, with Chinese imports at just 8.0 million bales. Only time will tell whether the market has finally got it right!
Looking at the latest US export sales report, which registered 158,200 running bales in net new sales, it has been noticed that China was the most active buyer with 69,500 running bales, followed by Turkey and Indonesia. In total there were 18 different markets interested in US cotton.
As stated earlier too, it is primarily a lack of attractive offers rather than a lack of buying interest that keeps sales below expectations at the moment and this situation is not likely to change until more cotton enters the marketing channels.
Total commitments for the season already amount to 4.9 million statistical bales, of which 0.9 million belong to China.
Fibre2fashion News Desk - India
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