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China Sourcing Update: Prices of Natural Textile Materials (Aug 2017)

  1. Cotton price indices rise slightly in August

The price indices of cotton edged down in early August and then went up afterwards. The CC Index 3128B, for example, rose to 15,916 on 31 August after falling from 15,888 on 31 July to 15,858 on 9 August (see exhibit 1).

In our view, the slight drop in cotton prices in early August was caused by market rumours about the possible extension of the sales of state cotton reserves by a month to 29 September. After the news became official on 9 August2 , however, cotton prices have trended upward due largely to an increase in the restocking demand from downstream textile manufacturers.

Going forward, the global supply of cotton is expected to be abundant in the current autumn harvest season. Meanwhile, the domestic downstream demand for cotton is likely to stay strong during the current high season. All in all, we expect domestic cotton prices to stay high in the near future.

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Content provided by Fung Business Intelligence
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