Moreover, cotton production in India, the world’s second-largest grower, is expected to hit an all-time high after monsoon rain delays caused farmers to switch out soybean and peanut crops, Bloomberg reports.
Higher Indian output “is going to add more supply to the global market,” Michael Smith, the president of T&K Futures & Options, said in the Bloomberg article. “The last thing cotton needs at this point is more bearish news.”
However, China, the world’s top producer and consumer of cotton, may sop up some of the extra supply between September and December, with spinners requiring fresh domestic supplies or imports due to low inventories and lack of high-quality cotton, Reuters reports.
iPath Dow Jones-UBS Cotton Subindex Total Return ETN
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Max Chen contributed to this article.