"After a sharp rise in July, the benchmark prices for cotton showed a consistent and in some cases downward movement during the first half of August. While cotton prices continued to show little strength, in a way it kept costs down however, it also did not allow for pricing power down the pipeline. An US Department of Agriculture (US0D0A) reports shows spot prices averaged 72.06 cents per pound, down from 72.75 cents a week earlier but up from 60.92 cents reported the corresponding period a year ago"

After a sharp rise in July, the benchmark prices for cotton showed a consistent and in some cases downward movement during the first half of August. While cotton prices continued to show little strength, in a way it kept costs down however, it also did not allow for pricing power down the pipeline. An US Department of Agriculture (USDA) reports shows spot prices averaged 72.06 cents per pound, down from 72.75 cents a week earlier but up from 60.92 cents reported the corresponding period a year ago. Values for the December New York futures contract climbed to levels over 75 cents per pound in early August, but have since retreated to values below 71 cents per pound. The A Index followed a nearly identical pattern, with values climbing above 85 cents per pound in early August and then decreasing to levels below 82 cents per pound. The China Cotton Index also recorded slight decline in August as compared to July as in international value terms it slides to $ 1.01 a pound from $1.05 a pound in late July. The trends were noticed to be similar in markets like India and Pakistan.

US cotton production hit by inconsistent weather

As per a report released by Cotton Incorporated in August, changes in prices was primarily influence by extreme weather conditions over most of the US cotton belt for much of the past month. In West Texas, there were concerns about yield due to no irrigation virtually and series of storms kept the region under lash. The weather has also been a major influence affecting Indian prices. With a late onset of monsoon, there were concerns Indian acres would be driven lower and yields might suffer. However, timely arrival of monsoon in certain key parts of the country accelerated cotton planting.

Downward cotton price yields mixed market results

Downward cotton prices have mixed results for fabric firms and apparel manufacturers heavily seeded in cotton use. The International Textile Group recorded a 6.9 per cent increase in gross profit to $24.9 million in the second quarter due to by lower raw material and energy costs. The parent company of Cone Denim and Burlington Worldwide, also revealed lower selling prices in denim due to lower cotton prices leading to a 5.7 per cent decrease in consolidated net sales to $148.4 million. Similarly, Gildan Activewear also registered a fall in its net income in the second quarter as sales decreased 3.5 per cent to $688.9 million, owing to lower raw material and other input costs, and manufacturing cost savings.

As per Cotton Inc’s latest report in spite of a lot of cotton in the world, the process of working off excess built up in the wake of the 2010-11 price spike has made progress. The latest figures indicate that stocks at the end of the 2016-17 crop year will be 22.5 million bales lower than they were at the end of the 2014-15 season.