MUMBAI (Commoditiescontrol) - Spot March cotton settled about 0.40 cent lower on Friday, down 0.03 cent for the week in volatile trade. Main factors that influenced the market were US-china trade war and US government partial shutdown.
ICE cotton touched multi-week low of 70.65 cents/lb on Jan 3 after which it found support on the back of low level buying mainly due to mills fixation and buying from Indian subcontinent. A downward revision for India’s crop estimate by CAI to 33.5 million bales and the possibility of a further cut in production estimate could be supportive for the market.
Now market is looking for the outcome of US-China trade talk. Market players expect if the outcome is going to be positive it may push market upwards, but this upside move could be temporary. It is unlikely that China will buy substantial quantity of cotton as the latter was not seen as an aggressive buyer for other origins except for Brazil. After the initiation of trade talk with US, China has made some purchase of Soybeans as goodwill gesture but no such buying was seen in cotton, indicating that China has no much appetite of US cotton.
Furthermore, there is news that viscose and polyester yarn have continued to fall in China in spite of some recovery in crude prices and slow down in Chinese economy which may restrict major buying from China.
Moreover, unavailability of market data from US government agencies such as WASDE report, export reports and CFRC report will create an atmosphere of uncertainty which normally tends to bearishness in market.
Till above mentioned two issues are resolved market is likely to trade sideways with negative bias.
(By Commoditiescontrol Bureau)
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