The expectation of a sharp fall in cotton prices remained elusive in Indian markets in November due to slow arrivals and falling yield due to pest attack. The cotton crop is set to fall significantly, say reports. The Cotton Association of India has projected 2017-18 crop output at 375 lakh bales (170 kg each). However, based on reports from mandis, CCI feels the yield will be lower by at least 10% and, with lower arrivals at the beginning of the season, the crop size may be lower. However, clarity on the crop is expected in coming weeks on the extent of damage the pink bollworm has done to the standing crop, especially in Maharashtra and Telangana, which together harvest 40% of the total crop.

Usually, from November onward, daily arrival historically average 200,000 bales a day. This month, they are 30% lower. This has even dented exports prospects and may be less by 20% than previous target.

Coarser variety cotton spot prices rose INR250-1,075per candy during November while benchmark Shankar-6 was traded down INR975a candy, at INR37,500 a candy on average. Finer variety cotton was cheaper by INR900-1,675 a candy during the month.

In China, cotton spot markets were under weak correction, and traders were mainly inclined to offload goods. The China Cotton Index fell 23 Yuan to close the month at an average of 15962 Yuan a ton.

US cotton Futures on the ICE rose over 2% during November amid light trade and marking its biggest weekly gain in over two months during the last week, following the release of impressive US export sales data amid a weaker dollar. March contracts settled at US cents 71.73 per pound. The USDA reported net upland sales of 357,000 running bales for 2017-18 marketing year, down 30% from the previous week, but up 18% from the prior four-week average. December contracts, facing first notice day, gained US cents 4.61 atUS cents 72.23 per pound and traded up 30 points over March. Traders not wanting to risk having to make or take delivery closed or rolled December positions prior to first notice day.

Spot benchmark, Cotlook A index gained 1.8% in November at US cents 80.13 per pound.
In Pakistan, cotton prices jumped as market remained panicky over the uncertainty about crop size and lint quality. In spot, spinners continued to chase quality cotton, with lint prices attaining a new peak. Availability of quality cotton was getting difficult, perturbing spinners who are exploring the option of imports. Although spinners prefer to import cotton from India the government ban has so far restricted imports from the neighbour. Reports showed that ginners have started holding stocks in anticipation of a windfall profits by disposing lint at higher rates later.

Cotton Yarn
Cotton yarn markets were mostly subdued in China during November amid thin transaction, and some sellers lowered their high offers slightly for some specs. Conventional varieties like 21S, 32S and 40S saw slightly better demand. Open-end cotton yarn market was steady, and the demand situation was moderate. However, discounts were available depending on specific orders as markets held poor outlook. 21s averaged 19.35 Yuan a kg (US$2.93 a kg) while 32s was at 23.22 Yuan a kg (US$3.51 a kg) in Shengze. In India, cotton yarn prices dropped in November with 30s combed yarn for knitting was INR2.50 cheaper on the month at INR192 a kg (US$2.97a kg, down US cents 3) in Ludhiana while export offers fell US cents 5 to US$2.95 a kg.

Polyester staple fibre prices were up in China, Pakistan and India during November. In China, as PTA futures was under fluctuation the polyester markets remained range bound. Some PSF producers were heard offloading goods on discounts later in the month. Offers for 1.4D direct-melt-spun PSF in Jiangsu and Zhejiang averaged US$1.37-1.39 a kg, while the same in Fujian and Shandong were at US$1.35-1.41 a kg, all up US cents 1-2 on the month. In Pakistan, PSF were hiked to a record level over a fresh surge in demand and prices until mid-November in China. Prices gained PakRs1.50 a kg or 1.1% at PakRs135.50-136.50 a kg or US$1.10-1.12 a kg. In India, PSF prices gained INR2.25 to INR89.50 a kg or US$1.38 a kg.

Polyester yarn prices were down in India and Pakistan and up in China. Offers for polyester yarn in China were up US cents 4 in November with 32s at US$2.06 a kg while 45s scaled to US$2.21 a kg. In India, polyester yarn 30 knit yarn fell INR 10.25 in November to INR135.25 a kg or US$$2.09 a kg (down US cents 15) in Ludhiana market.

Polyester intermediates
Purified terephthalic acid prices, which have been on a consistent uptrend since mid-October, were still on the rise but at a slower pace than earlier as demand was softer currently of the year. Producer inventories were at critical low level. Another reason for firm prices has been strong crude oil prices, giving strong support for the polyester intermediate rise to higher. Asian markers gained US$36.50 November with CFR China at US$685-687 a ton. In India, PTA priceswere up US$36.25 at US$709 a ton CIF.

Mono ethylene glycol markets remained under the influence of rising crude oil values, amid increasingly bearish market sentiment in the key China market. However, falling inventories in East China supported spot markets as they were down in November to 491 thousand tons. Asian spot MEG prices gained US$5.50 on the month with CFR China at US$890-905 a ton and CFR South East Asia to US$921-926 a ton. In India, MEG prices gained US$10 to US$902 a ton CIF to average in November.