Feb.2020

by Cotton Incorporated

Recent price movement

Most benchmark prices decreased over the past month.

？ The nearby March NY futures contract fell from 71 to 68 cents/lb. Open interest is migrating out of March and into the May contract. Values for May futures also decreased and commonly traded at levels a little less than one cent higher than March futures. Prices for the December contract， which are a reflection of expectations after the 2020/21 harvest， traded slightly higher than values for both March and May and are currently just below 70 cents/lb.

？ The A Index declined from 79 to 77 cents/lb.

？ In international terms， the China Cotton Index （CC Index 3128B） decreased from 91 to 87 cents/lb. In domestic terms， prices eased from 13，800 to 13，400 RMB/ton. The RMB weakened slightly against the dollar over the past month， from 6.93 to 6.98 RMB/USD.

？ Indian cotton prices （Shankar-6 quality） slipped from 73 to 71 cents/lb. In domestic terms， values fell from 40，500 to 39，400 INR/candy. The Indian rupee was stable near 71 INR/USD.

？ Pakistani prices were stable near 71 cents/lb in international terms. In domestic terms， values held close to 9，000 PKR/maund. The Pakistani rupee was also steady， consistently trading near 155 PKR/USD.

Supply， demand， & trade

The latest USDA report featured an increase to the forecast for world production in 2019/20 （+850，000 bales to 121.3 million） and a decrease to the forecast for 2019/20 world mill-use （-1.2 million bales to 119.0 million）. An upward revision to last crop years production （+454，000 to 118，603 million）， lifted the estimate for 2019/20 beginning stocks. In combination， the increase in beginning stocks， the increase in production， and the decrease in consumption resulted in a 2.5 million bale increase to the projection for 2019/20 ending stocks （82.1 million bales）. This figure is slightly above levels maintained since 2016/17 （between 80.0 and 80.8 million bales）.

The largest country-level revisions to production figures included those for Pakistan （+500，000 bales to 6.6 million）， Brazil（+200，000 to 12.7 million）， and Tanzania（+100，00 to 500，000）.

For mill-use， the largest updates were for China （-1.0 million bales to 37.5 million）， Vietnam （-300，000 to 6.8 million）， Pakistan （+200，000 to 10.8 million）， and Turkey（+100，000 to 7.2 million）.

The global trade forecast was lowered 285，000 bales to 43.5 million. In terms of imports， the biggest changes were for Vietnam （-300，000 bales to 6.8 million）， Pakistan （-100，000 to 4.2 million）， South Korea（-100，000 to 600，000）， India （+100，000 to 2.3 million）， and Malaysia （+250，000 to 1.0 million）.