Cotton prices dropped by a penny in November, finishing the month at 75.6 cents per pound. Larger-than-expected global production and weakening demand in Asia continue to put downward pressure on prices.
The seven-market U.S. average spot price is ahead 7% on a year-to-date basis and 8.6% compared to the same month last year. It remains well off the 52-week high of 89 cents reached in August.
The price declined slightly in the first three weeks of November, but then edged up in the final days of the month due to pent-up demand from spinners.
Although commodities forecasters were expecting global production to fall in the coming year, particularly in the U.S., it now looks as if crops in key regions might be bigger than originally expected. India will have larger-than-expected crops due to an abundance of rain during monsoon season and clear weather during the harvest. U.S. cotton market experts are now predicting yields that top prior expectations.
China began to offer for sale some of the cotton reserves it had been stockpiling in support of local prices. However, the price at which it offered the stocks was higher than the market price for imports, so got few takers. Reportedly only 50% of the cotton offered was bought by Chinese spinners. Importers in China are also nearing the time at which they need to use up import quotas before they expire.
Demand for cotton, while strong in some Asian countries, remains flat in China and the U.S. due to tepid economic growth and a fashion trend that favors synthetics.