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Sunday, April 21, 2024

All you need to know about cotton this week

Pakistan’s cotton market remained steady throughout the week. Millers are looking for quality cotton that keeps the trading volumes satisfactory. The cotton rates in Punjab and Sindh are at the same level. The prime quality cotton is available at Rs22500 per maund and a little inferior quality is fetching Rs2000 per month in both the provinces. Higher Phutti prices depict the demand of cotton in the Pakistani market. Phutti is fetching a high price of Rs10200 per 40 kg and the minimum rate at which it is available in Punjab is Rs8500 per 40 kg.

This incidentally is the minimum support price of phutti fixed by the government. On Thursday 1300 bales of Khair Pur were sold at Rs 20,500 to Rs 21,000 per maund, 200 bales of Kot Sabzal, 200 bales of Sadiqabad, 400 bales of Haroonabad were sold at Rs 21,000 per maund, 200 bales of Burewala were sold at Rs 21,200 per maund, 200 bales of Khanewal, 1200 bales of Rahim Yar Khan were sold at Rs 22,000 per maund, and 1200 bales of Dera Ghazi Khan were sold at Rs 22,500 to Rs 23,000 per maund (showing an increase of Rs500 per maund).

The KCA Spot Rate of cotton remained unchanged at Rs 21,500 per maund. While, Polyester fiber was available in the market at Rs 365 per kg. Two ongoing armed conflicts have affected the global economy and cotton trade. The Russia/Ukraine and Israel/Palestine show no sign of any resolution. This has led to instability in the international markets resulting in upward trends both in inflation and interest rates, slowing down the economies of several countries. The result was a drop in demand for cotton, with textile mills operating at a slower pace throughout 2023 and, consequently, importing less.

The retail price range for Australian cotton is between US$ 4.06 and US$ 8.71 per kilogram or between US$ 1.84 and US$ 3.95 per pound(lb). The retail price range in Australian Dollar for cotton is between AUD 6.10 and AUD 13.10 per kilogram or between AUD 2.77 and AUD 5.94 per pound(lb) in Canberra and Melbourne.

The retail price range for Indonesian cotton is between US$ 0.87 and US$ 1.16 per kilogram or between US$ 0.39 and US$ 0.52 per pound(lb). The retail price range in Rupiah for cotton is between IDR 14,460.00 and IDR 19,280.00 per kilogram or between IDR 6,557.82 and IDR 8,743.76 per pound(lb) in Jakarta and Surabaya.

The retail price range for Cambodia cotton is between US$ 0.25 and US$ 0.44 per kilogram or between US$ 0.11 and US$ 0.20 per pound(lb). The retail price range in Riel for cotton is between KHR 1,028.13 and KHR 1,850.63 per kilogram or between KHR 466.27 and KHR 839.29 per pound(lb) in Phnom Penh and Siem Reap.

The retail price range for Vietnam cotton is between US$ 1.43 and US$ 2.38 per kilogram or between US$ 0.65 and US$ 1.08 per pound(lb). The retail price range in Dong for cotton is between VND 35,771.25 and VND 59,618.75 per kilogram or between VND 16,222.79 and VND 27,037.98 per pound(lb) in Hanoi and Ho Chi Minh City.

The retail price range for Bangladesh cotton is between US$ 0.92 and US$ 1.62 per kilogram or between US$ 0.42 and US$ 0.73 per pound(lb). The retail price range in Taka for cotton is between BDT 98.78 and BDT 173.90 per kilogram or between BDT 44.80 and BDT 78.87 per pound(lb) in Dhaka and Chittagong (Chattogram).

In India as per the latest market rates, the average Cotton price is ₹6768.79/Quintal. The lowest market price is ₹3830/Quintal. The costliest market price is ₹8200/Quintal.

The retail price range for Brazil cotton is between US$ 1.56 and US$ 1.64 per kilogram or between US$ 0.71 and US$ 0.75 per pound(lb). The retail price range in Brazilian Real for cotton is between BRL 7.78 and BRL 8.21 per kilogram or between BRL 3.53 and BRL 3.72 per pound(lb) in Brasilia and Rio de Janeiro.

Brazil, which retained its position as the second largest cotton exporter, is targeting all major cotton consuming countries for 2024 as it aims to become the largest cotton exporter. Cotton Brazil targets ten countries (Bangladesh, China, South Korea, Egypt, India, Indonesia, Pakistan, Thailand, Turkey and Vietnam), which together accounted for 89 percent of global cotton imports and 95 percent of exports from Brazil in the 2022/23 market year.

For 2024, Cotton Brazil’s schedule has already been planned. The first of six international missions planned for the year begins in February with visits to Bangladesh and Indonesia. This is an Abrapa program in a joint partnership with the Brazilian Trade and Investment Promotion Agency (Apex Brasil) and the National Cotton Shippers Association (Anea).

In addition to being the second largest exporter, Brazil became the third largest cotton producer in the world last season (2022/23). Estimates from the Brazilian National Cotton Shippers Association (Anea) indicate that between July 2023 and June 2024 Brazilian exports will reach a total of 2.4 million tonnes – 72 percent more than in the previous season (July 2022/June 2023).

In the United States cotton futures rally to highest level since September 2022. Cotton prices climbed sharply, making an 18-month high, despite a decline in the overall commodity complex and bearish outside market data.

Bullish technical signals increased buying, helping boost prices. March futures settled at 94.63 cents per pound, up 553 points for the week. May futures settled at 95.31 cents per pound, up 563 points for the week. Total open interest decreased 3,563 contracts from the previous week, totaling 261,881 contracts.

USDA set a baseline of 11 million acres to be planted in cotton, and production to rebound at 16 million bales. Prices have moved in cotton’s favor since Cotton Grower magazine estimated 10.2 million acres in January.

U.S. inflation increased unexpectedly, dialing back expectations of a cut to interest rates anytime soon. Before the hot inflation news, the S&P 500 set a record, closing above 5000 for the first time in history. The U.S. Consumer Price Index increased by 0.3 percent in January and 3.1 percent annually, much higher than the market expected.

January is typically an erratic month for inflation readings, but this was a solid signal that the Fed will continue its “higher for longer” path. The stock market tumbled on hotter-than-expected consumer prices but managed to recover some of the losses by the end of the week. Shopping slowed down in the U.S. in January, evident by the 0.8 percent decline in U.S. retail sales and 0.2 percent decrease in clothing sales. U.S. initial unemployment claims fell, showing continued resiliency in the U.S. labor market.

U.S. export sales were lower for the week, but still above the pace needed to reach the 12.3 million bale estimate from USDA. A net total of 160,500 Upland bales were sold for the week, lower than recent reports but still above what needs to be sold to reach the current export expectation. A total of 276,100 Upland bales were exported, below average for what we typically see at this time of the year. A net total of 5,300 Pima bales were sold and 5,500 bales were shipped for the week.

Merchants will be focused on winding down the last bit of their March futures next week, given First Notice Day for March Futures is Friday, February 23. Buyers in East Asia should return to the market next week after taking a week-long break for the New Year festivals.
The National Cotton Council’s Annual Meeting takes place this weekend. They will release their Economic Outlook and Planting Intentions for the 2024/25 crop on Sunday, February 18.

As of Thursday afternoon, grower offers totaled 25,323 bales. On the G2B platform 5,147 bales traded during the week with an average price of 83.04 cents/lb. The average loan was 50.55 bringing the average premium received over the loan to 32.49 cents/lb.
Meanwhile The ICAC’s Task Force on Commercial Standardization of Instrument Testing of Cotton (CSITC) is on a decade-long run of improvement in Round Trials (RTs), with the positive results that began in 2011 extending through 2023.

In each RT, participating laboratories test 1-12 instruments not only to reduce variation and ensure that their instruments are producing accurate and consistent results, but crucially, to demonstrate to the industry that they are serious about the quality of their work. Properly calibrated instruments benefit everyone in the cotton trade by ensuring all parties are compensated based on accurate numbers, reducing the delays and additional costs that result from claims and arbitrations.

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