The cotton futures on China's Zhengzhou Commodity Exchange soared Monday, with active buying after India announced a ban on cotton exports, market sources said Monday.
China's cotton futures are closely connected to spot monoethylene glycol and purified terephthalic acid markets. As a feedstock for cotton substitute polyester, PTA futures rose in tandem.
On Monday, actively-traded May cotton futures closed at Yuan 21,265/mt ($3,373/mt), surging Yuan 220/mt from last Friday, while September cotton futures closed at Yuan 22,040/mt, jumping Yuan 280/mt from last Friday.
On Monday afternoon, the CFR China PTA price was pegged at $1,206/mt and MEG at $1,094/mt, both flat from last Friday. Despite the overnight plunge in NYMEX crude oil futures as well as weak polyester sales-production ratio, the PTA and MEG markets were supported Monday amid soaring cotton futures.
India's Directorate General of Foreign Trade, or DGFT, started prohibiting cotton exports with immediate effect from Monday. The DGFT did not provide the reason behind the prohibition.
Overnight Friday, NYMEX April crude futures settled $2.14 lower at $106.70/barrel. On Monday, a polyester sales-production ratio was reported at 50-80% down from 120% last Friday.
