" Cotton Traffic Jam In Asia," informed about the quasi cotton war, mainly in Asian countries. After Pakistan's restriction on cotton, India's Ministry of Textiles imposed an export stop on Indian cotton and cotton waste." Cotton Traffic Jam In Asia," informed about the quasi cotton war, mainly in Asian countries. After Pakistan's restriction on cotton, India's Ministry of Textiles imposed an export stop on Indian cotton and cotton waste. India's textile industry was concerned about its own cotton supply and had requested this measure. An export tax of 3 percent had already been put on cotton exports for some time beforehand. According to the Indian Export regulations, cotton exports have to be registered at the Ministry of Textiles, and only registered amounts may be exported. And the traffic jam goes on.

Stormy Weather Some two weeks ago, Tropical Storm Hermine formed in the Gulf of Mexico off of Texas. This was not only a problem for the region in danger, but also for the cotton growing areas. On the other hand, according to information from Plexus Cotton Ltd., some panic-like trading in China made the market soar to new heights.

On top of that, the International Cotton Advisory Committee (ICAC) reports heavy flooding in Pakistan has affected more than 20 percent of its cotton-growing area. ICAC has revised down the 2010/11 Pakistan crop estimate by 15 percent to 1.9 million metric tons. Also, ICAC projects production in China will be lower than was projected in August because the weather in the Yangtze River Valley region has been unfavorable.

On top of that, crop reductions are possible in China, Pakistan, Brazil and some African regions, while world mill use should be more or less maintained. There is also the possibility of a further reduction in Chinese stocks going back several seasons. China Cotton Association members reported carryover stocks at just 205,000 metric tons at the end of August, which is the equivalent to a little more than a week's worth of mill consumption. While this number doesn't include government reserves, consignments and mill stocks, Plexus reflects that it is still a good indication of how tight supplies must be in China at the moment.

Soaring Prices The market has now gone up for weeks without much of a pause. According to Plexus, New York futures continued their surge last week, as December closed 533 points higher at 95.76 cents, and March closed 565 higher at 94.73 cents. The nervous situation increased even further upon India's announcement of a postponement of its export registrations until at least October 1. Plexus reports: "The Indian textile industry has been asking the government to restrict cotton exports until January, when a more accurate assessment of the crop size will be possible, after stronger than usual monsoon raised concerns about this year's output. The previously announced duty free quota of 5.5 million bales was already smaller ... and this postponement has been adding more uncertainty to an already jittery market."

Reduced Available Sources Plexus further reports: "The delay by India, the world's second largest cotton exporter, is further reducing the available sources, just weeks after the world's fifth largest exporter, Brazil, saw its prices explode to prohibitive levels and has recently even issued a duty free import quota of 1.1 million bales. Since the export policy and availability of the third largest exporter, Uzbekistan, remains largely uncertain at this point and number four Australia won't bring any relief until well into the second quarter, the US is currently the only big chair to sit on.

"That became quite evident when the latest US export sales report were released [noting that] 845,600 running bales of Upland and Pima cotton were bought by 21 different markets. Quite remarkable was that 256,000 of those bales were for the 2011/12 season. For the current season export commitments now total 7.9 million statistical bales, of which only 1.2 million have been shipped so far."

More Chinese Imports In its Sept. 1, 2010, edition of "Cotton This Month" ICAC reports: "China and India are expected to account for most of the increase in global cotton mill use in 2010/11, while consumption in Pakistan could decline due to damage and disruption caused by the floods.

"Imports are expected to continue to recover in 2010/11, growing by 9 percent to 8.5 million tons. This increase will be driven by Chinese imports, forecast 29 percent larger at 3.1 million tons. Chinese stocks decreased considerably during 2009/10, and the government started in August to auction an important portion of its national reserve. Imports by Turkey are expected to decline to 786,000 tons in 2010/11 due to a larger crop. U.S. exports are projected up by 27 percent to 3.3 million tons in 2010/11, fueled by the expected larger crop. Exports from India, Brazil and Australia are also expected to increase. The share of the United States in global exports is projected to rebound from 34 percent in 2009/10 to 39 percent in 2010/11."
POST: 2024-11-25