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Saturday, February 24, 2024

All you need to know about cotton this week

The local cotton market remained firm and the trading volume remained satisfactory. The market remained closed on Friday on Allama Iqbal day.

The rate of cotton in Sindh ranged between 15,200 to Rs 18000 per maund.  Phutti was traded in Sindh below the support price at Rs 5,500 to Rs 7,200 per 40 kg.

The rate of cotton in Punjab was higher at Rs 16,000 to Rs 18,000 per maund butthe rate of Phutti in Punjab was below support price ranging between Rs 6,500 to Rs 8,200 per 40 kg. The trend was reversed in Balochistan where the rate of cotton was lower at Rs 17,000 to Rs 17,500 per maund but  the rate of Phutti was higher at between Rs 7,500 to Rs 8,800 per 40 kg.

600 bales of Tando Adam were sold at Rs 16,400 per maund, 400 bales of Kumb, 1400 bales of Saleh Pat, 800 bales of Khair Pur were sold at RS 15,500 per maund, 200 bales of Obaro were sold at Rs 17,700 per maund, 800 bales of Mehrab Pur were sold at Rs 15,500 to Rs 17,200 per maund, 400 bales of Mir Pur Mathelo, 600 bales of Ghotki were sold at Rs 18,000 per maund, 600 bales of Layyah were sold at Rs 16,000 per maund, 200 bales of Tunsa were sold at Rs 17,000 per maund, 200 bales of Shadan Lund were sold at Rs 16,400 per maund, 800 bales of Bahwalpur were sold at Rs 16,600 to Rs 17,000 per maund, 800 bales of Fort Abbas were sold at Rs 16,800 to Rs 17,200 per maund, 1600 bales of Mian Wali were sold at Rs 17,000 to Rs 17,350 per maund, 200 bales of Marrot were sold at Rs 17,200 per maund, 600 bales of Shuja Abad were sold at Rs 16,000 per maund, 800 bales of Chistian were sold at Rs 16,700 per maund, 1400 bales of Faqir Wali were sold at Rs 16,800 to Rs 17,000 per maund and 1000 bales of Khanewal were sold at Rs 18,000 per maund.

Experts say that cotton is not meeting the country’s need for textile raw materials, so we must invest in alternative sources. Agriculture has not been given satisfactory results due to non-investment by the industry for a century. They deplored that the rate of agricultural commodities is set by the commission agent instead of the Farmer.

Cotton production in India during 2023-2024 cotton season is expected to be 6 percent lesser than the season that ended on September 30.

The Committee on Cotton Production and Consumption, which met on November 6, estimated cotton production in the current season (October 2023 to September 2024) to be 316.57 lakh bales (170 kg each) as against 336.60 lakh bales in 2022-2023.

The total consumption by textile mills is expected to be 294 lakh bales compared with 295 lakh bales last season. Exports are likely to be 25 lakh bales and imports 12 lakh bales. The committee projects production to be lower in the central (Gujarat, Maharashtra, and Madhya Pradesh) and southern zones (Telangana, Andhra Pradesh, Karnataka and Tamil Nadu).

The price of Shankar-6 variety of cotton on Monday, November 7, was ₹56,500 per candy.

Cotton Corporation of India Chairman and Managing Director Lalit Kumar Gupta said its officials were present at all procurement centres and will ensure that farmers get the minimum support price. “Price is subject to many factors, including domestic and international inventory,” he said.

Cotton production is affected by pink bollworm and inadequate monsoon in many parts, said Atul Ganatra, president of the Cotton Association of India. According to Nishant Asher, secretary of Indian Cotton Federation (ICF), the main issue this year will be demand and not supply. The daily arrivals to the market at present is 70,000 to one lakh bales. Currently, Indian cotton prices are on a par with the international prices. If the international prices decline, Indian cotton will become expensive. This will hit the domestic textile industry further, he said.

Brazil’s cotton market saw fluctuations as buyers and sellers disagreed on prices. Purchasers pressed for lower rates, resulting in limited trades, mainly for inventory replenishment.

Some sellers held firm on high-quality cotton prices. Market liquidity decreased, with logistical challenges. Cotton processing reached 74 per cent nationally.

Cotton prices experienced fluctuations in the Brazilian spot market this October. The market saw a divergence between the quality of cotton and the prices demanded by buyers and sellers. Purchasers exerted pressure on quotations by holding firm on their price expectations, whime same te, sellers sought higher values, resulting in moments of stability, according to a report from the Center for Advanced Studies on Applied Economics (CEPEA).

Despite a keen interest in new transactions, purchasers remained inclined to offer lower values. Consequently, only a limited number of trades were concluded in October, primarily aimed at replenishing inventories or for immediate consumption. Notably, some sellers stood resolute on their price demands, particularly for high-quality cotton, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

In the United States the December futures settled below 80.00 cents per pound this week, settling below the long-term average. Much of the price action in the cotton market this week was technical related. Commodity index funds have started to roll their positions forward, which was a major contributor to this week’s sell-off. Pressure was also added from weak domestic cotton prices in China, slight uncertainty with the Fed’s rate decision this week, and continued geopolitical tensions.

The market stayed far below average on Thursday, but a strong Export Sales Report did provide a modest intraday boost to cotton prices. December futures settled at 79.80 cents per pound, down 479 points when compared to the week prior. Daily volumes are expected to remain strong in the coming week, as index funds continue to roll forward their positions from December to March. Certificated stock increased 7,753 bales to 78,459 bales while total open interest increased 694 contracts to 237,088 since last Thursday.

The stock market was under pressure much of the week, anticipating the release of the Federal Open Markets Committee (FOMC) decision regarding interest rates at their meeting this week. As expected, interest rates were held steady, with the suggestion that interest rate hikes might be done. Traders still expect cuts to interest rates midway through 2024, but the Fed did mention that it’s not in their immediate plans. Stocks were up to close out the week, due in part from optimism provided by the continued pause in rates and strong third quarter earnings that were reported. Crude oil fell off this week as well. While a portion of the losses were recovered by the end of the week, the lower prices added pressure to cotton. The U.S. Dollar traded on both sides this week, but eventually settled lower on the Fed news and a rise in initial unemployment claims.

Increased demand for U.S. cotton was reported for the second consecutive week. The U.S. exporters sold a substantial 457,100 Upland bales and 25,800 Pima bales, with both growths reaching a marketing year high of bales sold in a week. Sales were far above what is typically seen during this week of the marketing year. China took the lead as the biggest buyer this week, booking 324,000 Upland bales. Rumor has it that purchases for the Chinese Reserve made up a good portion of these sales. Mexico was the next biggest buyer, booking 108,200 bales, followed by Peru with 11,200 bales, South Korea with 8,400 bales, and Vietnam with 7,000 bales. It seems that the continued lull in prices and recent International Cotton Association (ICA) Trade Event helped drum up more demand for U.S. cotton. With more cotton coming in, shipments have reached a more seasonal pace. A total of 132,200 Upland bales and 2,600 Pima bales were exported for the week.

West Texas, Oklahoma, and Kansas experienced a cold front over the weekend, which brought along the hard freeze many producers were waiting for to finish out the growing season. The week ahead is forecast to bring unseasonably warm temperatures and little moisture, which should allow harvest to resume across the region. Harvest is slightly ahead of pace, with 49 percent of the crop having been harvested by the end of last month. This could change on next week’s Crop Progress report, due to the recently wet conditions that stalled harvest in many areas of the Cotton Belt.

Next week will contain a flurry of activity in the cotton market. The largest of the commodity index funds will begin to roll their positions next Tuesday, the WASDE Report will be released on Thursday, and December options expire next Friday. As if that is not enough, traders will also keep their usual focus on weather, daily classing reports, and the Export Sales Report to see if the recent price dips will continue to show increased demand for U.S. cotton.

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