Global Cotton Market Witnesses Sharp Decline in Prices
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- Published: Thursday, 16 May 2024 01:33
The global cotton market has experienced a notable downturn in benchmark prices over the past month, as reported by Cotton Incorporated. According to the latest Monthly Economic Letter - Cotton Market Fundamentals & Price Outlook for May 2024, key futures contracts and indices have seen significant drops, indicating a challenging landscape for cotton producers and traders.
The July NY/ICE futures contract, which serves as a crucial indicator for short-term price movements, has witnessed a substantial decline from 93 to 77 cents per pound since early April. Similarly, the December NY/ICE futures contract, reflective of price expectations post the 2024-25 harvest, saw a notable drop from 84 to 75 cents per pound. This sharp decrease in July prices has led to a narrowing of the gap between values for 2023-24 and 2024-25 deliveries, with just a couple of cents separating the two, compared to a 15 cents per pound difference observed at the end of February.
The A Index, another important benchmark, decreased from 93 to 86 cents per pound, signaling a broader trend of declining prices in the cotton market. The Chinese Cotton Index (CC Index 3128B) also followed suit, dropping from 108 to 105 cents per pound in international terms.
Domestically, Chinese cotton prices have seen a decline from 17,200 RMB (~$2,377.56) per ton to 16,700 RMB (~$2,308.45) per ton, with the RMB maintaining stability against the dollar at approximately 7.23 RMB/USD. This reduction in prices reflects the challenges faced by cotton producers in China amidst the changing dynamics of the global market.
Indian spot prices for Shankar-6 quality cotton have also witnessed a downturn, falling from 93 to 88 cents per pound. In domestic terms, prices decreased from ₹60,500 (~$724.43) to ₹57,500 (~$688.51) per candy, with the INR holding steady near ₹83 per USD. This decrease in prices reflects the broader trend observed in the global cotton market and underscores the challenges faced by Indian cotton producers.
Similarly, Pakistani spot prices have experienced a decline from 94 to 88 cents per pound, with domestic values decreasing from 21,500 (~$77.3) to 19,700 PKR (~$70.83) per maund. Despite this decline, the PKR has remained stable around 278 PKR per USD, providing some stability amidst the market volatility.
Overall, the sharp decline in cotton prices across various key indices and contracts highlights the challenges faced by cotton producers globally. Factors such as oversupply, changing demand dynamics, and macroeconomic uncertainties are likely contributing to the downward pressure on prices, necessitating careful navigation for industry stakeholders in the months ahead.