In the past week, driven by the rise in ICE futures, international spot demand has remained strong, and importing countries have been active in purchasing. The main traded varieties are new and old US cotton, new Brazilian cotton and West African cotton.
That week, Pakistan imported a large amount of West African cotton, Argentinian cotton and US cotton. Inquiries from China continue to increase, mainly for Brazilian cotton and U.S. cotton shipped from July to August, but the quotations are very few and the price difference is large. The focus is on port bonded cotton. Inquiries and purchases are mainly for U.S. cotton shipped from July to September. Moreover, the installation period ranges from the current date to the first half of 2022. At present, the price of gauze in China is still strong, and the price transmission in the supply chain is relatively smooth, which promotes the transaction of imported cotton. India’s import demand is also very good. The domestic spot market is very active, with prices rising by nearly 5% within a week. The current CCI inventory is less than 3 million bales, and the cotton market volume is also a historical low. Indonesia purchased Australian cotton for August shipment. Although the quantity is not large, the basis difference is very high.
That week, the rise in cotton prices in Pakistan began to cool down, and cotton prices in India continued to rise to a multi-year high, leading to increased demand for imported cotton by textile mills in the south. One of the reasons why prices fell rapidly after ICE reached an annual high in February this year is that Indian cotton prices were significantly discounted to international cotton prices at that time, resulting in a large number of Indian cotton export transactions.
At present, inventories in the United States and around the world are tight, and it is surprising that U.S. cotton export sales are good. In the next few months, the supply of US cotton, Brazilian cotton and Australian cotton will be very limited, and the basis difference of high-grade cotton will be very strong. It remains to be seen whether textile mills will purchase high-grade cotton before US cotton and Brazilian cotton are launched in large quantities. However, West African cotton sales have been very good in the past month.
Currently, rising international sea freight rates are the biggest problem in cotton trade, and traders are nervously waiting for changes in sea freight rates in the third quarter. Recently, a large shipping company canceled all shipping from West Africa to Bangladesh, causing cotton merchants to significantly delay shipments. </p
