June 2024 basic cotton price index decreased

According to information from the Vietnam National Textile and Garment Group, cotton base prices decreased in June 2024. Compared to a month ago, the NY/ICE July contract expiring has decreased from 77 to 72 cents/lb. However, a surge in the second half of May has raised the July price to 82 cents/lb.

The NY/ICE December contract fell from 75 to 72 cents/lb over the past month. December prices also rose sharply in the second half of May, pushing the December contract price up to 79 cents/lb.

The A Index fell from 86 to 83 cents/lb over the past month. The China Cotton Index (CC Index 3128B) fell slightly, from 104 to 102 cents/lb in foreign currency terms. In local currency terms, cotton fell from 16,500 to 16,200 RMB/ton. The Chinese Yuan was relatively stable against the USD, near 7.24 RMB/USD.

In June 2024, the basic cotton price index decreased. Illustrative photo

Indian spot cotton prices (Shankar-6) fell from 88 to 85 cents/lb. In local currency terms, cotton fell from 57,500 to 55,900 INR/candy. INR held near 83 INR USD.

Spot cotton prices in Pakistan were stable at 86 pence. In local currency terms, the value was unchanged at 19,700 PKR maund. PKR was stable around 278 PKR/USD.

Vietnam Textile and Garment Group cited the latest report of the US Cotton Association (USDA), global cotton production has been slightly revised up, expected to increase by about 191 thousand bales to 119.1 million bales and consumption is expected to increase by 80 thousand bales to 116.9 million bales for the upcoming 2024/25 crop year. Historical adjustments have increased beginning inventories by 493 thousand bales to 81.0 million bales. These adjustments have increased global ending inventories slightly by 480 thousand bales to 83.5 million bales.

The 2024/25 global cotton trade forecast remains unchanged at 45.0 million bales, with Vietnam’s imports increasing by 100,000 bales to 7.1 million bales, Australia’s exports increasing by 100,000 bales, and the US decreasing by 500,000 bales.

At this early stage before the start of the 2024/25 season, there is still plenty of time for variables to influence the price outlook. Current expectations clearly suggest that cotton production will increase, implying more cotton to consume and trade. However, it is unclear whether market demand will be sufficient to absorb the increased production.

The inflation shock and sharp rise in interest rates have been felt and economies around the world have had a chance to adjust to these changes. Likewise, the eventual bottoming of cotton prices could give spinning mills the confidence to buy more.

After the spike in 2021/22, NY/ICE futures quickly fell below 75 cents/lb (falling to 72 by the end of October 2022) before rebounding to 80 and above for most of the trades that have occurred since then.

The current price decline could form a clearer bottom in the market and this could support purchases as it is less likely that prices will fall further and then turn around. Demand is expected to increase from USDA forecasts, with all the world’s top spinning countries expected to consume more fiber in 2024/25.

There have been some reports of increased orders across the supply chain, but with geopolitical uncertainty and non-stimulative interest rates, the recovery in demand is likely to be slow. The price direction may be determined by the magnitude and speed of demand recovery and how this recovery relates to the expected increase in global cotton production and export supplies in the coming season.

According to Mr. Cao Huu Hieu - General Director of Vietnam Textile and Garment Group, the current decrease in cotton prices has helped yarn manufacturing enterprises reduce losses by 70-78%. Yarn enterprises expect that the market situation will improve in the second half of 2024, the yarn industry will completely stop losing money and start making profits.

Source: https://congthuong.vn/thang-62024-chi-so-gia-bong-co-ban-giam-328131.html