Cotton price falls to 5-month low due to demand concerns and prospect for good crops

Cotton made it up to 68 US cents a pound at the end of June after heavy rain had impeded sowing in the US. It then lost 6% by the end of the season on 31 July. Since then, the price has dropped a further 4% to less than 62 US cents a pound, its lowest level since mid-March. 

Disappointing economic data from China have fuelled concern on the cotton market about demand from the global number one consumer and importer. A further setback in July also came from continuing US dollar gains and better weather in the main US cultivation regions. 

At the end of last week, too, the USDA reported that orders had been cancelled in the week to 30 July, largely by Turkey, leading to negative net sales in the reporting week. These relate to the 2014/15 harvest, though, and the season 2014/15 overall ended with higher US exports than the USDA had predicted.


"However, sales from the coming harvest are lagging behind last year's, despite the resent sound data. In addition the prospect of a large crop in India, where a record area is to be cultivated, is depressing prices, as is better weather than expected in an El Niño year", says Commerzbank.