The Chinese cotton crop is expected to be larger than last year. Global export prices are not attractive in China. Higher external prices should be a headwind for Chinese cotton fiber and yarn imports.

Lower Chinese yarn imports imply lower mill demand for yarn exporters like Vietnam. In turn, Vietnam is a major importer of cotton fiber and lower Vietnamese spinning demand suggests lower fiber import demand from that important market. Lower import demand from China may eventually weigh on global export prices.

Chinese prices decreased in late October and into November.Indian spot prices (Shankar-6 quality) decreased in a comparatively uniform fashion over the past month. Pakistani prices also decreased in a relatively linear manner. The recent volatility in NY/ICE futures has been attributed to various factors, including short covering in the futures market and import interest from China.

The steep increases in early November can also be interpreted as sensitivity to potential increases in demand for US exports. US stocks are low this crop year, and US shipments will have to be rationed by prices if the appetite exists from the demand side.However there are questions whether there will be enough demand to sustain prices at higher levels.