Cotton prices continued their see-saw ride in June, rising more than 4 percent in the month after a 3 percent drop in May that followed a more than 4 percent increase in April.
So far this year, prices have risen by almost 7 percent, though they remain 22 percent below year-ago levels.
According to the latest data from the U.S. Department of Agriculture (USDA), the seven-market U.S. average cotton spot price increased by two-and-a-half cents per pound to $0.649.
Although there was no major change in market conditions that explained the spot price movement, many in the industry are viewing the current crop year as a period of transition following the reforms in Chinese policies emphasizing increased use of reserve supplies and sharply lower imports.
The world production estimate for the current season decreased by 415,000 bales to 118.9 million, primarily due to a reduction in the Indian crop forecast. Global mill-use figures remained unchanged, however, at 111.5 million bales, resulting in slight adjustment down in world cotton stocks to 110 million bales for the 2014-2015 season, 8 percent above last year’s level.
Estimates for the 2015-2016 season reflect the expectation that world cotton production will decline by 7.6 million bales to 111.3 million. Although cotton mill-use is expected to increase by more than 4 million bales, since China is the world’s largest user of cotton, much of this will be supplied out of the country’s huge cotton reserves stock. The country is expected to import only 6 million bales of cotton in the 2015-2016 crop year, two-thirds of the current year’s level.