The global market sees cotton deficit, which makes the cotton prices grow at both international and domestic markets.
At the moment the global market is uncertain: on the one hand, China reduced it raw-material imports in connection with celebrating Chinese New Year while the US exports remain high. On the other hand, the volume of the cotton inventories around the world is low (in the US it is the lowest one since 1960).
Numerous analytic agencies question the real volume of the cotton production in India which also speaks in favor of the supply deficit (India’s cotton production volume in 2010/2011 is expected to make up 32900 bales while it should be about 39000 bales). At this point the market is overbought. So a correction is highly probable in the short run, which corresponds to the seasonality chart. However, its depth and duration is hard to foresee, so one should be cautious about it as the demand prevails because of the insufficient supply. The data chart given below confirms it.
The Department of Commodity Trading,
