Cotton Commodity closed higher on Monday due to good physical demand and reports of delay arrivals in Gujarat and Rajasthan, after three weeks of lower closing. According to CAI, cotton production in 2018/19 is likely to fall 4.7 % from the previous season to 34.8 million bales, as scant rainfall and an attack of pink bollworms expected to affect the crop yields. This year harvest likely to delayed in both Gujarat and Maharashtra due to late rains and sowing thus the peak arrival season would deferred by more than a month to Dec - Jan, which may result in supply squeeze in Nov. As per CAI, India’s forward export contracts of cotton have more than doubled from about 7 lakh bales in September 2017, driven by increased demand from China.
Cotton futures expected to trade sideways to lower tracking weak trend in international prices. However, reports of cancellation of cotton export orders and improving domestic area may pressurize prices as the harvesting season comes near.
Successful growth depends on sunshine, moderate rainfall and heavy soils – conditions that are found in the dry tropics and subtropics in the Northern and Southern Hemispheres. China, India the U.S. are the top three producers of cotton. The top producing states in the U.S. are Florida, Mississippi, California, Texas and Arizona. Planting typically begins in February, and crops are harvested in the fall.
Price Drivers for Cotton Commodity
• cotton subsidies (cotton is one of the most subsidized crops in the U.S.; any change could lead to drastic price swings)
• extremely wet or dry weather or natural disasters
• competing synthetic fibers
• demand from emerging markets
Cotton is a fluffy natural fiber that grows on shrubs in tropical and subtropical regions around the world. The commodity is a staple in the textiles industry. Historians don’t know the precise origins of cotton, but cloth found in caves in Mexico proves that the crop was around more than 7,000 years ago. Since the Age of Antiquity, civilizations of Soybeans Commodity, Sugar Commodity, Corn Commodity around the world have spun cotton fibers into cloth garments.
Cotton plants grow in warm regions of the world where there is ample sunshine and limited frost. Cotton farmers plant their crop in the spring and harvest it in autumn. Prior to planting, farmers prepare the land using either the no-till method, where they use special equipment to deposit the seeds on the soil’s surface, or the till method, where they plow the land into rows forming seedbeds for planting.
