Price Drivers for Cotton Commodity

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Cotton Commodity Has Been An Important Crop For
Numerous Civilizations Throughout History
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• It is believed to have been in use since
  prehistoric times. A perennial shrub, cottons
  fluffy fiber is spun and woven into yarn or
  textiles to be used in clothing and other
  household goods everything from socks to bed
  sheets and towels. Both lightweight and
  absorbent, cotton is used more than any other
  fiber in the world.
• 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.

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• 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,
  Indias 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.

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• 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

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• 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 dont 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.

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• 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 soils surface, or the till method,
  where they plow the land into rows forming
  seedbeds for planting.

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