Cotton prices

US Cotton Futures. Physical Prices. Spot Prices in India and Pakistan
Cotton Prices Disconnected from Commodity Markets

7 July 2008
Cotton prices significantly fell in the past week on the international market. For the first time in months, a new rise in other commodity markets was ignored while an official report announcing a lower-than-expected decline in cotton areas in the United States triggered the decrease in cotton futures. An international cotton body however predicted a rise of 9 cents in physical prices in the next season.
For the first time in months, New York cotton futures last week seemed decoupled from the other commodity markets.
While crude oil and soybeans were rising to new record levels, cotton prices heavily fell at the same time after the US Department of Agriculture (USDA) predicted higher cotton areas in the United States than previously expected.
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The report was considered "bearish" by the market with prices immediately losing ground.
By Thursday's closure on the eve of July 4th, key December 08 was down 6.05 cents from previous Friday or 7.43%.
Demand from spinners is remaining at a low level although prices clearly retreated over the past days.
U.S. export sales remained negligible in the week to June 26th, acording to the USDA with China being absent of the market.
Cotton market analysts are now expecting prices to further slide in the coming week.
Towards 82 cents
New projection data were however released by the ICAC, predicting lower ending stocks at the end of 2008-09 than earlier estimated.
Forecast level for average "A Index" was raised by 3 cents per pound, from the previous month, at 82 cents.
This would consist in a 9-cent rise in a single season (see our table below).
In India, the Government rejected any ban on cotton exports but admitted it could lower import tariffs.
Prices surged in the past months on the domestic market, last week triggering demonstrations by textile workers.
Cotton prices started declining in Pakistan, ahead of the arrival of the new crop.
The official spot rate was lowered by 100 rupees to 3,650 rupees per maund of 37.32 kilos (63.55 cents per pound).
This is still a much higher level than observed in the past months but lower than current price levels on the international market.