Cotton Futures Prices Rising in NYBOT and NCDEX over Positive Consumptions

Azocommodity.com - Cotton futures prices in New York Board of Trade (NYBOT) and in India's National Commodity and Derivatives Exchange (NCDEX) may rise in coming sessions on the back of reports over positive consumption of the commodity in China and demand is likely to rebound.

In NYBOT, cotton for July delivery traded up 0.34 cents to 71.25 cents per bushel and in NCDEX, the commodity for June delivery down 0.78% to 957.5 per qtl on 31th May at 15:15 IST

In India, cotton production is expected to be around 35 million tons for 2011-12 and is expected to consume around 23.3 million bales. The rest of the production is expected to be exported.

According to Cotton Council International, export promotion arm of UN National Cotton Council, the natural fibre demand among the middle class people in China is growing and the country is expected to consume round 9.58 million tons this year from earlier estimates of 9 million tons.

But China is expected to produce around 6.4 million tons of cotton for the current year, 13% less compared to last year as farmers reduced the land under the cotton acreage on high input cost.

With this, the imports of the country may rise to 4 million tons this year.

This is likely to raise the cotton futures in US and in India as they are the major exporters of cotton in the world.

Cotton futures fell to their lowest in two-and-a-half years, sapped by a warning over the potential for China selling down some of its bumper stocks, besides broader market liquidation.

New York cotton for July dropped to 66.10 cents a pound in early deals, the lowest since November 2009, before staging a recovery later in the day.

The early decline came on a further day of liquidation in financial markets, sapped by concerns for the trio of Chinese, European and US economies.

"The outlook for global fibre demand continues to deteriorate, and prices are following suit," Luke Mathews at Commonwealth Bank of Australia said, flagging the significance for an industrial, rather than food, commodity of "ongoing liquidation across global financial markets".

In China, the top cotton producer, consumer and importer, the benchmark January lot fell down the exchange limit of 4.0% on the Zhengzhou exchange.