Slow producer sales, lower crop prospects in India, US dollar index weakness and technically oriented buying have combined to lift cotton futures above the highs of the prior four weeks. Concerns about US crop quality also may have played a role.
Prices averaged 57.61 cents, up from 54.41 cents, reflecting gains to 12.62 cents from 10.94 cents in premiums over loan repayment rates. Deficit rains have stunted India’s crop growth and lowered expected yields. Rainfall during the southwest monsoon season (June to September) was 14 per cent below the long-period average.
The Cotton Corporation of India was expected to begin procurement under the minimum support program the third week of October. US total cotton demand remained estimated at 13.9 million bales, 9,20,000 bales below last season and the smallest since a similar offtake in 1988-89. Exports at 10.2 million bales would account for 73 per cent, with domestic mill use contributing the remainder.
Global stocks are projected to decline four per cent or nearly five million bales from the 2014-15 all-time high. The world stocks-to-use ratio is forecast at 95 per cent, down from 101 per cent last season, but well above the recent low of 40 per cent in 2009-10. China is expected to account for 61 per cent of the world carryover, similar to the prior two seasons.
