By admin       2016-08-24

Cotton prices are still hovering below 70 cents per lb; with technical pressures mounting as indications that rain helped out the crop in the US providing little reason for traders to continue the summer rally.US cotton prices had a volatile summer, in mid-July ICE cotton futures rallied into the mid-70s, peaking in early August around 78 cents, before they staged a quick reversal back below 70 cents. The rally was due to hot and dry weather in Texas in July, followed by a rainy August.In India, the cotton market is also under pressure as physical demand has slowed while expectations for the crop in Gujarat and Maharashtra have improved. This stability might only be temporary, cotton production in the country is expected to hit a seven-year low in 2016-17 due to lower planted acreages and pest attacks.In China, the government announced that it will run its annual cotton auction a month longer than planned because of the recent run-up in prices and complaints of shortages by mill owners. The daily auctions, which began May 3, will continue through September. China has accumulated a huge stockpile of cotton over the past few years, as the government began purchasing domestic cotton with guaranteed minimum prices to help out local farmers. News of the extended auction had little impact on global cotton prices. Normally, China is a significant influencer on global pricing with its import demand having a significant impact; however, for the past two years the market has been well aware of the country’s massive cotton stockpile; therefore, demand expectations have been muted.

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