Cotton Drops While Weak Yarn Demand Is Concerning Sluggish Milling Demand

Yesterday saw pressure on cotton candy, which ended up down -0.95% at 56600. This was mostly because of worries about slow milling demand amid a slowdown in yarn demand worldwide. The bearish feeling was further exacerbated by the possibility of a better crop in nations such as Australia. On the other hand, strong demand from important importing nations like Bangladesh and Vietnam for Indian cotton slightly offset the negative.

The ICAC (International Cotton Advisory Committee) has forecasted higher cotton-producing areas, production, trade, and consumption for the 2024–25 season. The cotton stocks of India, the second-biggest cotton producer in the world, are predicted to plummet by around 31% in 2023–2024, to their lowest point in more than thirty years. Lower output and increased domestic consumption are the reasons for this decrease in inventories.

Therefore, it is expected that reduced stock levels will limit exports, thereby stabilizing world prices and possibly affecting the profit margins of regional textile manufacturers. Anticipating a two percent decline in cotton production for the 2024–2025 marketing year, producers may decide to switch land to crops with greater yields. Nonetheless, an improvement in yarn and textile demand in significant foreign markets is expected to fuel a 2% increase in mill usage.

Furthermore, it is anticipated that the extra-long staple (ELS) cotton import tax revision, which was just announced, will increase imports by 20%. For the 2024–2025 marketing year, China is expected to import more cotton to keep up with the growing demand for textile and clothing products both domestically and abroad. Planting preferences are changing, and China’s production is predicted to fall even with stable planted acreage in Xinjiang.

Leave a Reply

Your email address will not be published. Required fields are marked *