Outside Cotton Quotes: West African Cotton Is Selling Fast And India Cotton Prices Are High.

After nearly two months of sales, the high grade cotton (SM 1-1/8 and above) has been sold in large quantities in West Africa in 2018/19, and the supply of medium grade cotton has also begun to tighten.

This year, the decline in quality of cotton and the reduction in cotton output in Australia have brought great opportunities to the export of high-grade cotton in West Africa.

In 2018/19, the total output of West Africa cotton was about 5 million 410 thousand packs (1 million 180 thousand tons).

The reduction of global high-grade cotton supply brings trouble to the textile mills that require SM 1-1/8 grade cotton and long staple cotton.

While the supply of high-grade cotton in West Africa has been reduced, the supply of SM 1-/8 and grade 1-5/32 cotton in Brazil has also decreased.

The Asian main port quoted price of West Africa SM 1-1/8 cotton rose to 1300-1400 points, and some cotton traders even withdrew their quotations.

The base of M 1-1/8 cotton also reached 1150-1200 points, up 50-100 points from the previous week, and India and Bangladesh's procurement was active.

2018/19 cotton resources in West Africa are few and will be sold in a month. Bangladesh and India textile mills can not buy India cotton stocks.

At present, India S-6 1-1/8 grade cotton has risen to 81-82 cents, J-34 to 84-85 cents, so high prices forced India textile mill to buy imported cotton, while Bangladesh textile factory to find non India cotton.

Extended reading

Brazil cotton has everything ready for export.

Recently, the Brazil cotton Exporters Association estimated that the total output of cotton in Brazil will increase to 2 million 640 thousand tons in 2019 (2 million tons in 2018, an increase of 32% over the same period last year), while in 2019 Brazil cotton exports will rise to 1 million 700 thousand tons, up 35% over the same period last year.

Brazil commodity supply company predicts that the cotton planting area in Brazil will be expanded by 35.4% in the year 2018/19, and the output of cotton will be 2 million 660 thousand tons, up 32.8% from the same period last year. The latest monthly report of USDA predicts that cotton production in Brazil will reach 2 million 787 thousand tons in the year of 2018/19, which is quite prominent over the same period. However, it is predicted that the export volume of Brazil cotton will be only 1 million 263 thousand tons, which is quite different from the data released by Brazil Cotton Association (437 thousand tons).

The consensus reached by various institutions and international traders is as follows: first, the output of cotton in Brazil increased by more than 30% over the same period last year, which will make up for the reduction in Australia and Uzbekistan, and effectively increase supply while suppressing ICE rebound. Two, Brazil's grade and quality of machine picked cotton will be further improved, and the substitution of medium and high quality cotton, cotton, and cotton will continue to grow.

Since the Chinese government imposed a 25% tariff on imports of US cotton in July 6, 2018, Brazil cotton has shown a continuous "blowout" growth in exports to China. Chinese textile enterprises and traders have more and more recognition of Brazil cotton quality, spinnability and consistency. The substitution of EMOT/MOT and ME to C/A has increased significantly.

On the one hand, due to the weather factors in the main producing areas in 2018/19, the color level and quality of the main producing areas are greatly reduced, and the impurities are relatively high. Compared with SM and M grade Brazil cotton, the main reason is that the impurities are not dominant. On the other hand, Sino US trade war leads to a certain amount of import contracts which can not be implemented. The buyers and sellers consult with Brazil cotton and Australia cotton instead of delivery.

According to statistics, as of April 30th, Brazil cotton (about 2 million 5 thousand tons) had sold 71.4% in 2017/18, of which 720 thousand tons were exported, of which the Chinese market accounted for more than 50%.

According to the analysis of some international cotton enterprises, importing enterprises and institutions, Brazil cotton will continue to "go all the way forward" with the expected increase in output and export volume in 2018/19, and it will not fall into the competition with India cotton, Australia cotton and American cotton. The annual import volume is expected to reach more than 700 thousand tons.

First, the Sino US trade negotiations will continue the pattern of "talking while fighting", and the market share of the US cotton China will be divided by Brazil cotton and India cotton.

On May 30th, the spokesman of the Ministry of Commerce reiterated at a press conference that China would never accept any agreement that undermines the sovereignty and dignity of the state. China will never give in on major principles.

Therefore, unless the US attitude and sincerity change fundamentally and sign the agreement, there will be little chance of the cancellation of tariff cancellation for us cotton imports.

Second, Brazil cotton has an advantage in the price of CNF, CIF and FOB.

From the current quotation of port SM 1-1/8 Brazil cotton, the price difference between S-6 and SM West Africa cotton is only 0.5-0.8 cents / lb, which is lower than SM 1-5/32 1-5/32 cotton 9-9,5 cents / pound, which belongs to "high quality and low price".

Thirdly, the classification and quality of cotton in Brazil have improved continuously in recent years, matching with the demand of Chinese textile enterprises.

Brazil cotton grade SM/M, length 1-1/8 and 1-5/32 ratio become the main body, and the content of impurity in the machine picked cotton is reduced and the consistency is improved. Most of the indexes are equal to that of the US cotton.

Fourth, in 2019, 800 thousand tons of quasi tariff cotton import quotas or before the end of June.

Considering that domestic cotton supply is relatively adequate, cotton competitiveness is not prominent under the sliding tariff, and the quality of cotton that is bonded and can be selected at 2018/19 is relatively narrow. In 2019, Brazil cotton and Australia cotton will become the focus of cotton textile enterprises' attention and procurement.