The A-Index cotton price will stay high in the short term, fluctuating around 84–88 cents per pound, but an increase in supply as the cotton season swings into gear will place downward pressure on the price by the end of the second quarter. On a global basis, the expected increase in supplies from the Northern Hemisphere will also create pressure for lower prices to finish 2017, while the availability of new harvest supplies from the Southern Hemisphere should arrive in the third quarter, dampening prices further. The cotton season has just begun, though, and weather will determine the extent of cotton production expansion.
On a regional basis, the Chinese cotton price should remain strong, around 104 cents per pound, with the release of cotton stocks. The margin between the global price and the Chinese price remains tight, discouraging significant buying from exporters. Within the United States, the cotton market also continues to tighten as export expectations are revised higher and stocks drop in 2016-17. Southern Hemisphere cotton harvest supplies should enter the market shortly, lowering the pressure on US cotton exports.