This post is going to be one of my first ones after almost of five years of break or so… and Abid Omar surely deserves to have the credit to bring me back to this forum which he started online back in 2003 summers, and i happen to be the president of the TISF at that time. Anyways, coming back to the subject of my post, as you all may be aware of the importance of Cotton in today’s textile value chain, i wish to bring to you the commercial side of this fiber trade so that you can comprehend the various market reports on cotton that come to you from various sources as i also plan to share the ones that i send on the TIP alumni mailing group.
Cotton is traded world over in different denominations like most popular being US $ /lb but this differs market to market when we go more specific to country wise like in Pakistan it is traded in Rs. /Maund(37.324kgs) or in China Rmb/ton or in India Rs. /candy(227kgs)(356kgs). So in order to understand and compare various prices all over the world we should be able to comprehend these into one single unit to better understand and analyse the available data.
The five major cotton exporting countries in 2009 were (1) the United States, (2) India, (3) Uzbekistan, (4) Brazil, and (5) Pakistan. So if we look at the cotton exports of US and India, that figure makes almost 50% of the total cotton exported worldwide so you can well imagine how the global trade is influenced by these two cotton producing nations. Lets first look at the US, the total domestic mill usage is almost 3.5 million bales against a crop size ranging from as high as 21.6 million (2006-07) and 12.2 million (2008-09). Each bale is of 480 lbs). So anything above 4 million bales, it needs to be exported. So that’s why the cotton trade world over is greatly influenced by the price of cotton futures traded on NY Board of trade (NYBOT). A specific standard for quality of cotton fibre with respect to its length and color is defined as a base, Premiums and Discounts for deviation from this base grade is offered by merchants world over. For example, Pakistani cotton is usually traded on a discounted price because of the higher trash contents whereas Indian cotton is traded on a premium because of its better quality like higher staple length and lower trash content. On NYBOT, Cotton is traded in form of contracts of each contract of 50,000lbs for contract months of March, May, July, October, December.
I now leave the subject open to you for more self exploration from following useful links and i jump on to share some updated market reports for you to have a taste on what kind of market reports i was referring to,