Cotton prices have fallen sharply on international markets, reaching their lowest level in weeks on the Intercontinental Exchange (ICE). Weak US export figures, profit-taking by traders and the dollar’s strength have created the situation, Fibre2Fashion reported.
Market analysis shows that in the most heavily traded December contract for this year, cotton fell 2.76 percent, bringing the price to 79.30 cents a pound. That was the biggest single-day fall in cotton in the past two weeks, taking the price below 80 cents for the first time since July 6. Contracts for other months also fell by 55 to 287 points, which analysts see as signalling a broad market downturn.
The main cause of the fall was the US Department of Agriculture’s (USDA) weekly export report. According to data for the week ending July 9, net US cotton sales fell to just 34,360 bales (480 pounds, or 220 kg, per bale), the lowest weekly figure of the current marketing year. Export orders for the coming season’s cotton were also lower than hoped. Falling global demand has left traders discouraged.
Alongside weaker export demand, the dollar’s rise has put extra pressure on agricultural commodity markets. The US dollar index rose for four consecutive trading days to reach an almost one-month high. A stronger dollar makes US cotton more expensive for international buyers, reducing its competitiveness on global markets. Wheat, maize and soybean prices have also fallen significantly as a result.
The domestic US economic situation is also affecting the market. US retail sales rose 0.2 percent more than expected in June. That positive data pushed up US Treasury yields, reducing the likelihood of a Federal Reserve rate cut and strengthening the dollar further.
Although low supply in the market should have kept prices somewhat higher, the effect has been entirely masked by the shock of weak demand. On the following trading day the December contract fell further, trading at 78.38 cents. Those concerned are now watching whether US weather and China’s state cotton auctions can stabilise the market in the coming days.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report