Sharp drop of the cotton production in India and China expected

The cotton price shed 2% yesterday on the back of generally weak commodity prices. The estimates of the US Department of Agriculture (USDA) published on Wednesday showed no changes to the figures for US cotton supply and demand as compared to the previous month. The global cotton beginning and ending stocks for the 2015/16 crop year were revised slightly downwards, however. The revision was due among other things to adjustments for the year 2014/15 and to reduced estimates of Indian cotton production. 

"According to the Cotton Association of India, the acreage could decline by nearly 7% as a result of the ongoing dry conditions in India. Meanwhile, the China Cotton Association believes that Chinese cotton production could also shrink by nearly 10% year-on-year to 5.86 million tons", notes Commerzbank. 

Furthermore, China is planning to sell part of its cotton stocks - the Chinese government intends to announce within the next ten days when the first sales will be taking place.