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. 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.
“The total consumption of cotton has risen every year for the last five years, despite the loss of market share. The current purchasing volume from mills indicates a consistent to cautious outlook for demand going into 2016. Current ICE cotton futures for December 2016 have ranged from 62-66 cents this year. Currently ICE futures all the way until October of 2018 are trading between 65.43 and 64.34 with the 2018 date representing the lowest in the range. In other words, investors aren’t betting on cotton spiking any time soon,” according to a Seeking Alpha analysis of BAL and cotton futures.
iPath Dow Jones-UBS Cotton Subindex Total Return ETN