For several months the cotton market has been idling for lack of buyers. Demand is now so sluggish that the production cut announced in India has had no impact on prices.
The estimated demand for the current cotton year is 110 million bales according to the latest report from the United States Department of Agriculture (USDA), 6 million bales less than last year. These figures could fall further given the sluggishness of the market.
« Consumption is appalling everywhere sums up a French trader. To which one of its competitors adds: “TheThe big brands have too much stock, and hardly place any orders “. The USDA expects world trade this year to be at its lowest level in 6 years.
The air call expected after the reopening of China has not taken place for the moment. The Middle Kingdom also has cotton at home, so don’t count on the country to rekindle the flame on the market, in the immediate future.
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Slow motion asian spinners
In Bangladesh, the main buyer of African cotton, imports have fallen due to the economic crisis. As a result, West African cotton is piling up in ports. Pakistan’s financial capabilities are such that imports have also collapsed. In Indonesia they should reach their lowest level since 1990 according to the USDA.
Turkish spinning mills are not doing any better than Asian spinning mills. They could, according to American forecasts, consume 1 million less bales this year.
Overproduction compared to demand
Opposite there is no shortage of cotton on offer. Despite disappointing productions, particularly in Côte d’Ivoire and Mali, but also in India, it looks good thanks to Australian and Brazilian productions which will rebalance the balance. And even if this were not the case, given the state of needs, the finding would certainly remain that of overproduction compared to demand, assures an expert in the sector.
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In this context, prices are essentially guided by bad macro-economic news. Cotton sags from week to week, ‘twhile remaining at an excellent price commented one of our interlocutors.
The start of Ramadan should not reverse the course trend: it is synonymous with slowing activity, which risks dragging down demand from the two major consumers of Bangladesh and Pakistan.