The best chance for Indian and Central Asian exporters to catch up on sales is probably in markets like Pakistan, Bangladesh and Russia, where the US is less active. These three markets are expected to import a total of 6.55 mio bales this season, according to the latest USDA report.
So where do we go from here? The swift move from 51 to 44 cents in May is starting to lose momentum, as the lack of volume this week indicates. Speculators have led the charge on the short side but they are not likely to add to their shorts or liquidate more longs unless technical indicators invite them to do so.
The trade has been a very good buyer on the way down, having covered nearly 3 mio bales of shorts over the last three weeks. With US cotton finding decent interest at current levels it is therefore not likely that the trade will force the short side either. Therefore, unless unforeseen events in outside markets (stock market, US dollar) prompt traders to sell, we may see a modest rebound in the days ahead, possibly to the 46/47 cents level in May.
However, any such bounce is likely to be short-lived and should be sold as the various A-index growths have no pricing power whatsoever. How low the market will eventually go depends on how keen the governments in India and Central Asia are to dispose of their rather large unsold inventory.