A Low-Pressure Area has developed in the Arabian Sea off the Maharashtra coast. It will intensify into a Depression and will move in a west-northwest direction. A Cyclonic Circulation is over Central Pakistan and West Rajasthan. Another Cyclonic Circulation is over Rayalaseema and adjoining areas. The east-west wind shear zone is extending from Low-Pressure Area to Southeast Bay of Bengal across Rayalaseema and a Cyclonic Circulation is also seen near Andaman and Nicobar Islands. Fourth Cyclonic Circulation is seen over East Assam.
Last week’s rally looks like a flash in the pan on the chart and the market has now fallen back to the 6025 breakout level. However, the low volume over the last couple of sessions suggests that it was more a lack of buying than heavy trade selling that caused the market to recede.
The ICE Dec contract surged for the week ending Friday, Sept 13 (casting off any negative superstitions, at least for the bulls), gaining 370 points to settle at 62.28. The Dec – Mar spread remains at less than full carry and strengthened to (50) on Friday.
Cotton Inc. Monthly Economic Letter September-2019
Cotton Market Fundamentals & Price Outlook
RECENT PRICE MOVEMENT
After falling in July, benchmark prices were stable in August and the first half of September.
• The NY December contract has held to levels near 58 cents/lb since mid-August.
• The A Index was steady near 70 cents/lb.
• In international terms, the China Cotton Index (CC Index 3128B) decreased from 88 to 83 cents/lb between early August and the present. Over the same period, the RMB eased 0.9% against the USD (from 7.05 to 7.12 RMB/USD).
Market Movement from 09th Sep 2019 to 14th Sep 2019
• NY future gained 370 points during this week, green week after long time. Market was bottomed out and fresh selling was limited. Market ignored bearish export sales data and WASDE report on positive news of US postponement of US tariff on Chinese goods, which was to be implemented from 1st October and China also responding positively.
Last week we felt that a breakout to the upside was more likely if spec shorts could somehow get triggered into covering. Positive vibes from the trade front combined with technical strength did the trick today and sparked massive spec buying, most of which was short-covering.
U.S. Market Share in China Down Sharply in 2018/19
The U.S. share of China cotton imports fell to 18 percent in 2018/19, down sharply from 45 percent in 2017/18, and was well below the 30 percent share seen over the previous 5 years. This was also the lowest market share since China reformed its cotton sector in 1999. U.S. cotton faced two challenges in China in 2018/19; first, the additional tariffs being placed on certain imports of U.S. cotton; and second, the arrival on the world market of two consecutive record Brazilian crops.
U. S. Macroeconomic Indicators & the Cotton Supply Chain
September 2019
Macroeconomic Overview: Concern about slowing economic conditions has resurfaced. Indices of manufacturing activity, which can serve as leading indicators for overall economic activity, signaled contraction for the U.S., the U.K., Germany, South Korea, and Japan last month. It was the first time since 2016 that U.S. manufacturing activity shrank.
The cotton roller coaster continues. The market was a down all week, corrected and moved high on Thursday, then gave up most of those gains and finally finished the week near the midpoint of the trading range…just about where the week’s trading began.
Highlights from the September 2019 Cotton This Month include:
• Global production is expected to increase 5% to 26.9 million tonnes • Global consumption is projected to increase 1% to 26.9 million tonnes • The excess production will cause global stocks to swell to 18.3 million tonnes • Prices will be under increasing pressure as a result of the growing supply
Post estimates marketing year (MY) 2019/20 cotton production at 29 million 480 lb. bales (37.1 million 170-kilogram bales/6.3 MMT) with a planting area of 12.7 million hectares. MY 2019/20 mill consumption remains weak as mills accumulate greater cotton yarn stocks due to poor demand. Export prospects have diminished while imports are expected to remain stable as they are price competitive against domestic supplies.
The uncertainties of the US-China trade situation continue to weigh heavily on the cotton market. This continues to sometimes be a tug-of-war between rumor and fact. The market may react positively to rumor or any hint of good news then retreat for lack of follow-through facts or due to subsequent conflicting news.
Those of you from my neck of the woods in lower Alabama, can certainly attest to the peskiness of gnats on a hot summer day. For those unfamiliar with such a worthless insect, let me fill you in. Gnats are small flying insects that serve no purpose on this earth but to pester the living daylights out of you by constantly buzzing around every orifice of your face.
The latest U.S. Department of Agriculture (USDA) estimates indicate that total U.S. cotton textile and apparel trade rose during the first half of 2019, compared with the corresponding 2018 period. U.S. cotton product imports totaled the equivalent of 9.0 million 480-pound bales of raw cotton during January-June 2019—compared with 8.8 million bales for the first 6 months of 2018—while cotton product exports declined slightly to 1.7 million bale-equivalents.
Cotton Textile exports reached a level of USD 739.17 million in June 2019 marking a decline of (-) 30.4 per cent against the corresponding month of June 2018, wherein exports were valued at USD 1,061.96 million.
In rupee terms, exports during the month of June 2019 reached a level of Rs. 5,132.72 cr. as against Rs. 7,199.39 Cr. in June 2018 marking a decline of (-) 28.7 per cent in rupee terms.
It doesn’t seem that long ago Hurricane Harvey hit Texas in August, followed by Hurricane Irma in September. That was in 2017, and in both cases cotton production was lost. In some cases, even bales already harvested were ruined in the storms.
China cotton imports in 2019/20 are expected to surpass the previous year’s robust level, reinforcing its position as the world’s largest importer. The current 2018/19 estimate, boosted this month, is expected to be the largest in 5 years as China supplements domestic supplies amid ongoing auctions of State Reserve stocks. Despite this strong upward trend in imports, U.S. exports to China have weakened as Brazil, Australia, and other countries have expanded both exports and market share.
Looking Beyond the Uncertainties of Trade Tensions
The trade dispute between the United States and China has impacted cotton demand and supply chains over the course of the past year. On 1 June 2019, China is set to increase tariffs on $60 billion of US goods in retaliation to the US tariff increase on the remaining $200 billion worth of Chinese imports.
While corn remains the major safrinha crop for Brazilian farmers, more cotton acreage is being planted in Mato Grosso this spring, as well.
Over the past two years, cotton planting has increased by nearly one-third for the safrinha in Mato Grosso. The Brazilian Association of Cotton Producers(Abrapa) forecast cotton acreage to grow to 1.4 million hectares (3.46 million acres). Mato Grosso accounts for about 88% of Brazil’s cotton production.
Historical Revisions to Indian's Cotton Balance Sheet - USDA
Historical Revisions to Indian's Cotton Balance Sheet - USDA
Historical revisions have been made to India’s balance sheet for the years 2002/03 through 2013/14, with the stock adjustment carried forward. The revisions are based on the conclusion that market yard arrivals data underreported arrivals in the early portion of the harvest season. This conclusion was based on observed market activity in November for several years.
Online Kapas Sale Procedure With regard to online Kapas sale, following modus operandi may be followed: 1. Online Kapas sale can be undertaken broadly on the same lines as per the online cotton seed sale system followed by the Corporation at present, i.e. kapas may be sold online on per qtl. basis to the registered buyers. 2. For registration, the buyer has to pay refundable security deposit of Rs 5 lacs and shall have to obtain digital signature for participation in e-auction. ......
