Prices More Stable
The New York cotton futures have overcome the low point of less than 50 ct/lb. The ICE futures of July and December have stabilized during the past two weeks despite the continuous adaptation of contract positions. Since the current economy is shaped by Covid-19 and the future development is almost unpredictable, futures are not expected to skyrocket in the short run.
The global cotton consumption and demand has dropped during the reporting period. Especially buyers from China, Pakistan, India, Bangladesh and Vietnam have tried to cancel existing contracts or to postpone shipments due to plant lockdowns or problems with import logistics. The spinning industries in China have begun to return to work. Just like the industry in the other countries, they suffer, however, from the steep plunge of prices as well as the significantly lower demand for yarns and fabric due to a slump with respect to business with textile importers from the U.S. and Europe.
Measures for containing the pandemic as well as the rising unemployment rate and short-time work with impact on the available income weaken the turnover of the textile and clothing sector. Even though some restrictions have been eased, only slow business recovery is expected. Thus, global cotton exports decline while cotton ending stocks rise, and cotton planting is becoming less attractive in many countries because of the current price level. The impact on the coming season cannot yet be foreseen.
There was only marginal turnover in Europe during the reporting period, last but not least due to the Easter holidays. The trade registered individual inquiries requesting immediately available raw material as well as tracking the price development. Despite beneficial and at last more stable cotton prices the spinning industry focused on their sales having suffered from order losses as well.
Bremen, April 23, 2020