In the past week, China and the United States continued to implement the first phase of the agreement. Except for China and Vietnam, which actively purchased U.S. cotton, spot transactions in other markets were very quiet. Affected by the popularity of US cotton exports, the demand for Brazilian cotton continues to be sluggish, and the basis difference between Asian main port quotations and origin FOB quotations has weakened simultaneously.
That week, the quotations of African cotton origin increased significantly, but cotton merchants only bought Mali cotton, and the basis difference was very high. Brazilian cotton basis continues to weaken and ginners continue to work hard to sell inventories, but prices are still not attractive enough for buyers. Bangladesh purchased West African cotton, but in very limited quantities, while Pakistan continued to import the cheapest Brazilian and Argentine cotton.
According to statistics, after the Indian Cotton Company slashed prices, its quotation was still about 2 cents/pound higher than the free market price. The total sales volume was only 50,000 bales (170kg/bundle), and the inventory was difficult to digest and replace. The continued increase in annual supply will be a negative factor for the international market in the later period. Currently, except for Bangladesh, there is very little procurement of Indian cotton from other regions.
There are still no decent transactions for Australian cotton in various markets. Although the output of Australian cotton is low this year, export sales do not seem to be a big concern. However, if we hope that demand will increase, the current basis of 2100 points is obviously too high. . At present, cotton merchants have many spot quotes for Brazilian cotton in 2019 and the prices are attractive. The SM 1-1/8 level strength is 27 and the basis difference is only 700 points (December contract). The M 1-1/8 level strength is 27. The basis of 26 is 500 points. The basis difference of Brazilian M 1-1/8 grade new cotton in 2020 is 800 points, but the transaction basis difference is 600-700 points. Once new cotton from Mato Grosso begins to hit the market in large quantities, the basis of Brazilian cotton will weaken further. Vietnam’s interest in Brazilian cotton has increased recently, and the basis of cotton in 2019 was close to 500 points. </p
