Cotton Trader: Strong cotton rally leads to global cotton inventory shortage

December 16, 2023

On September 14, the commodity market generally rose. Although cotton rose strongly, it still lags behind corn's 2.4% increase. Cotton traders said that due to tight global cotton stocks, and only a small amount of new cotton is listed, market enquiries are active, especially for Chinese textile mills. In addition, the firmness of yarn prices guarantees that there is still room for profit for textile mills to purchase raw materials at high levels.

Indian cotton will resume its exports on October 1, but the Indian textile industry urgently demands that the government lift the export ban again in January 2011. Since October 2009, the price of cotton in India has risen sharply. The transaction price of S-6 varieties has increased from 63.43 cents/lb in the early part of the current year to the current 110 cents/lb. In the past 20 days, the variety has increased. 24.81 cents/lb. The head of the textile department clearly stated to the Indian government that Indian cotton must first satisfy the domestic textile mill's demand for cotton, and then export to China, Pakistan and Bangladesh. In addition, due to high cotton prices, the Tirupp Exporters and Manufacturers Association of India (TEAMA) plans to close four textile mills in Tirupur on September 24 and 25.

Although the market basically faces favorable cotton prices, the market has accumulated excessive speculative long positions, especially in the Chinese market. If the cotton price bubble is broken, it will drag down the price of US cotton. But what worries the market is that the current fundamentals and technical graphics are all conducive to the rise in cotton prices. It is difficult to judge when the cotton price will collapse. From the trend of cotton prices, ICE** is expected to reach 97 cents.

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Mr. Yang

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