In the international cotton market, prices remain firm though China is likely to extend the cotton auction, which is mainly supported by the tight supply.

Pakistani cotton has begun to arrive on the market, but the quantity is small. Australian cotton output is less than 0.50 million tons. US, Indian, Uzbekistani, West African and Turkish cotton will arrive in November. So international cotton supply will remain tight till November.

For China, state cotton auction can refill the demand, so imported cotton yarn prices continue to be higher than Chinese cotton yarn prices. With the tight cotton supply till November, imported cotton yarn inventory at major Chinese ports don’t amount to much. With lower import volumes and higher prices, Chinese cotton yarn prices are not likely to fall.

With the fall in spot cotton prices, traders show lower interest in auctioning reserve cotton. Cotton supply for textile mills is expected to increase later. Cotton yarn prices are also ticking down.

The weaker sentiment has also passed on the downstream fabric market.

Chinese auction of state cotton may be extended from August 31 to September 30.

Looking at cotton yarn costs calculated by cotton futures, Chinese cotton yarn costs are lower than Vietnamese cotton yarn costs.