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Friday, February 23, 2024

Cotton market witnesses a dull trading session

The cotton market witnessed a dull trading session on Thursday, a trend that continued throughout the week. The cotton sport rate of KCA remained unchanged at the previous week’s level of Rs1700o per maund.

The better quality cotton in Sindh was available at Rs18000 per maund, while the inferior quality fetched Rs15500 per maund. The rate of Phutti in Sindh remained much below the support price of Rs8500 per 40 kg and was bought by the ginners from Rs5000 to Rs7000 per 40 kg.

The Prices of cotton in Punjab are a little higher for lower quality at Rs15800 per maund, while for premium quality, the price is the same at Rs18000 per maund, and Phutti prices were between Rs 6,500 to 7,000 per 40 kg.

In Balochistan, the cotton rates were the highest for lower quality, being Rs16500 per maund, but for premium quality, the cotton price was Rs1000 per maund, lower than rates in Sindh and Punjab. The Phutti prices usually remained highest in Balochistan, ranging between Rs 6,500 to Rs 8,200 per 40 kg.

In India, the price of a Cotton 29mm is ₹56,740 and is witnessing a declining trend of 0.21 percent. CPAI has asked Sebi to provide uninterrupted trading in cotton futures contracts. MCX informed that it is in the process of modifying the cotton contract specification, and no fresh position would be permitted in cotton January 2023 contracts and the subsequent expiry contracts until the revised contract specification gets finalized.

The retail price range for China cotton is between US$ 0.73 and US$ 0.86 per kilogram or between US$ 0.33 and US$ 0.39 per pound(lb). The retail price range in Yuan Renminbi for cotton is between CNY 5.15 and CNY 6.03 per kilogram or CNY 2.33 and CNY 2.73 per pound(lb) in Beijing and Shanghai.

The retail price range for Brazilian cotton is between US$ 1.54 and US$ 1.63 per kilogram or between US$ 0.70 and US$ 0.74 per pound(lb). The retail price range in Brazilian Real for cotton is between BRL 7.71 and BRL 8.14 per kilogram or between BRL 3.50 and BRL 3.69 per pound(lb) in Brasilia and Rio de Janeiro.

The retail price range for Australian cotton is between US$ 4.05 and US$ 8.70 per kilogram or between US$ 1.84 and US$ 3.94 per pound(lb). The retail price range in Australian Dollars for cotton is between AUD 6.09 and AUD 13.08 per kilogram or between AUD 2.76 and AUD 5.93 per pound(lb) in Canberra and Melbourne.

In the United States market, as the cotton futures consolidated after last week’s robust gains, the U.S. export sales were less than Impressive for the week.

Cotton futures traded on both market sides this week, consolidating after last week’s robust gains. The release of the WASDE this past Friday reported a smaller U.S. crop and a decrease in global consumption. The rally experienced last Thursday halted, and the overall bearish WASDE report sent March futures down headed into the weekend.

Cotton-specific news was light this week, but technical trading and macroeconomic news kept futures trading on both sides of the market. Crude oil prices tanked this week, and while they did recover slightly towards the end of the week, pressure from the decline weighed on cotton prices. For the week ending December 14, March futures settled at 80.81 cents per pound, down 178 points. 173 bales were decertified this week, dropping certificated stock to 5,953 bales. The daily volume traded was lighter than last week, and total open interest remained steady, decreasing 287 contracts to 196,796.

The stock market made substantial gains this week. Optimism from the Fed’s decision to hold interest rates steady on Wednesday fueled the rally. Major indexes were all higher, but the Dow, in particular, had a record close that day. The target rate range was kept at 5.25-5.5 percent, but forecasts have started to signal that three interest rate cuts could happen in 2024.

The Fed mentioned that they are cautious. They are still unsure if a recession will happen, but the effects of interest rates have yet to be fully realized in the U.S. economy. From here forward, the focus will be on unemployment, which remains historically low. Although the Fed decision was the week’s headline news in markets, there was a slew of economic data released leading up to the announcement.

The November Consumer Price Index (CPI) was slightly hotter than expected, increasing 0.1 percent month-over-month. The year-over-year increase was 3.1 percent, which is down from the October reading and shows progress towards the Fed’s goals. The Producer Price Index (PPI) was unchanged for the month and increased 0.9 percent year-over-year, below expectations. U.S. Retail Sales showed a surprise increase of 0.3 percent month-over-month, up 4.09 percent year-over-year. While the stock market reacted positively to the data releases this week, the data was bearish for the U.S. Dollar. The Dollar sank to the lowest level seen since this summer.

U.S. export sales were less than impressive at the end of last week. The sales for the week showed a subdued 57,800 Upland bales were sold to foreign markets. The biggest buyer for the week was Vietnam, booking 21,200 bales, followed by Honduras with 16,900 bales, El Salvador with 6,100 bales, Mexico with 3,500 bales, and Pakistan with 3,100 bales. Reductions were prominent in this report. Cancellations totaled 64,500 bales, with 56,200 bales from China alone. Shipments increased compared to last week but are still down from the average amount shipped at this point in the year. A total of 148,700 Upland bales were exported for the week. Pima sales and shipments fared better than what was reported for Upland cotton. Both Pima sales and shipments were up when compared to prior weeks. 7,700 Pima bales were booked, and 19,000 bales were exported for the week.

Now that harvest is done in the Southwest, the rains received over the past week are welcome, and more precipitation will be needed to restore soil moisture. The coming week will be another light week where cotton news is concerned. With the Southwest crop size almost as small as last year’s and continued worries about demand, traders will closely monitor the Export Sales Report and daily classing reports.

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