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Saturday, July 13, 2024

Cotton scenario this week

The local cotton market on Thursday remained steady and the trading volume remained low. But as the news crop arrival accelerated the ginners announced a 15 day strike to protest new tax measures on ginners in 2024-25 budget.

A general body meeting of the Pakistan Cotton Ginners Association (PCGA) held in Sukkur on Sunday decided to immediately suspend the procurement of raw cotton and delivery of the ginned lint to spinning units across the country as a protest. Procurement of new cotton crops, supply of lint to factories will also be halted in protest. A PCGA spokesman said that neither white lint will be delivered to textile mills nor any new cotton sale agreement will be signed until PCGA’s demands are accepted. He said the government would be responsible for the impact of strike on cotton growers, ginning and textile sector as well as cotton exports.

The phutti (cotton seed) prices in Sindh have come down to Rs8000 to 8500 per 40 kg while phutti prices in Punjab were higher at Rs9000 to 9200 per 40 kg. But there was no trading of Phutti in the market because cotton ginners across the country have gone on an indefinite strike to protest against new taxes.

The rate of new cotton in Sindh ranged between Rs 19,000 to Rs 19,200 per maund. The rate of cotton in Punjab fluctuated between Rs 19,500 to Rs 19,800 per maund. On Thursday around 400 bales of Sanghar and 600 bales of Tando Adam were sold at Rs 19,000 per maund. The Spot Rate remained unchanged at Rs 18,500 per maund. Polyester Fiber was available at Rs 375 per kg.

The Indian government has increased the minimum support price (MSP) for cotton by ₹501 to ₹7,121 a quintal, offering crucial support to growers but the hike will throw new challenges for the textile industry in general, say industry and trade officials. Prices could rise in the short term, imports may increase and exports could be hit, say stakeholders.

The retail price range for Australia cotton seeds is between US$ 0.96 and US$ 3.85 per kilogram or between US$ 0.44 and US$ 1.75 per pound(lb). The retail price range in Australian Dollar for cotton seeds is between AUD 1.45 and AUD 5.79 per kilogram or between AUD 0.66 and AUD 2.63 per pound(lb) in Canberra and Melbourne.

The retail price range for Argentina cotton seeds is between US$ 0.17 and US$ 0.17 per kilogram or between US$ 0.08 and US$ 0.08 per pound(lb). The retail price range in Argentine Peso for cotton seeds is between ARS 38.62 and ARS 38.62 per kilogram or between ARS 17.51 and ARS 17.51 per pound(lb) in Buenos Aires and Cordoba.

The retail price range for China cotton seeds is between US$ 2.26 and US$ 5.29 per kilogram or between US$ 1.02 and US$ 2.40 per pound(lb). The retail price range in Yuan Renminbi for cotton seeds is between CNY 15.81 and CNY 37.10 per kilogram or between CNY 7.17 and CNY 16.83 per pound(lb) in Beijing and Shanghai.

The retail price range for India cotton seeds is between US$ 0.49 and US$ 1.18 per kilogram or between US$ 0.22 and US$ 0.53 per pound(lb). The retail price range in Indian Rupee for cotton seeds is between INR 40.72 and INR 97.73 per kilogram or between INR 18.47 and INR 44.32 per pound(lb) in New Delhi and Mumbai.

The retail price range for Uzbekistan cotton seeds is between US$ 0.24 and US$ 0.30 per kilogram or between US$ 0.11 and US$ 0.14 per pound(lb). The retail price range in Uzbekistan Sum for cotton seeds is between UZS 2,975.00 and UZS 3,808.00 per kilogram or between UZS 1,349.21 and UZS 1,726.98 per pound(lb) in Tashkent and Samarkand.

The retail price range for Kazakhstan cotton seeds is between US$ 0.17 and US$ 0.31 per kilogram or between US$ 0.08 and US$ 0.14 per pound(lb). The retail price range in Tenge for cotton seeds is between KZT 77.62 and KZT 137.99 per kilogram or between KZT 35.20 and KZT 62.58 per pound(lb) in Nur-Sultan and Almaty.

The retail price range for Portugal cotton seeds is between US$ 2.27 and US$ 4.44 per kilogram or between US$ 1.03 and US$ 2.01 per pound(lb). The retail price range in Euro for cotton seeds is between EUR 2.10 and EUR 4.10 per kilogram or between EUR 0.95 and EUR 1.86 per pound(lb) in Lisbon and Porto.

The retail price range for Mali cotton seeds is between US$ 0.64 and US$ 0.81 per kilogram or between US$ 0.29 and US$ 0.37 per pound(lb). The retail price range in CFA Franc BCEAO for cotton seeds is between XOF 390.11 and XOF 494.92 per kilogram or between XOF 176.92 and XOF 224.45 per pound(lb) in Bamako and Sikasso.

The retail price range for Brazil cotton seeds is between US$ 0.65 and US$ 0.83 per kilogram or between US$ 0.29 and US$ 0.38 per pound(lb). The retail price range in Brazilian Real for cotton seeds is between BRL 3.24 and BRL 4.15 per kilogram or between BRL 1.47 and BRL 1.88 per pound(lb) in Brasilia and Rio de Janeiro.

The retail price range for Turkey cotton seeds is between US$ 2.77 and US$ 3.62 per kilogram or between US$ 1.25 and US$ 1.64 per pound(lb). The retail price range in Turkish Lira for cotton seeds is between TRY 54.78 and TRY 71.78 per kilogram or between TRY 24.84 and TRY 32.56 per pound(lb) in Ankara and Istanbul.

The retail price range for Egypt cotton seeds is between US$ 3.89 and US$ 4.86 per kilogram or between US$ 1.76 and US$ 2.20 per pound(lb). The retail price range in Egyptian Pound for cotton seeds is between EGP 121.46 and EGP 151.83 per kilogram or between EGP 55.09 and EGP 68.86 per pound(lb) in Cairo and Alexandria.

In the United States cotton futures were up modestly, finding support after trading on both sides of the market this week. December futures fell to their lowest level since October 2022 but recouped some losses by the end of the week. The contract traded 83 points higher, settling at 72.62 cents per pound. On Wednesday, India announced an increase of almost 7 percent to the Minimum Support Price for the 2024/25 crop, supporting cotton futures.

There seem to be two different stories about the market this week. The market hit its lows early on due to weaker Chinese manufacturing data, rain in West Texas, and speculators holding the second shortest position on record. Later in the week, buy signals were hit, and questionable weather forecasts in South Texas helped push the market back up.

Although daily volume was mixed this week, overall, it was lower than in prior weeks. Total open interest decreased from 2,032 contracts to 216,488. Bales eligible for delivery against futures decreased by 1,022 bales, bringing certificated stock to 136,187 bales.

The stock market fared well in the holiday-shortened trade week. A.I. giant Nvidia became the most valuable company in the world, helping boost the S&P 500 to another record high. The NASDAQ also posted a new high, and the Dow Jones was up for the week. Central banks around the world met this week. Even though the U.K. has reached 2 percent inflation, the Bank of England held interest rates steady, but the Swiss National Bank cut interest rates for the second time this year. Crude oil prices ticked higher on expectations of tighter supplies.
U.S. Retail Sales were weaker than expected in May, up 0.1% month-over-month versus the expected 0.3 percent. For the year, Retail Sales rose 2.3 percent. Despite the overall slowdown, Clothing and Clothing Accessories were up 0.9 percent month-over-month and 2.4 percent year-over-year, which is encouraging.

The U.S. Export Sales Report showed another week of good sales but lackluster shipments. U.S. exporters sold 189,000 Upland bales for the current crop year and 111,800 for the new crop year. Shipments of 197,900 bales were higher than in recent weeks but are still below the pace needed to reach USDA’s estimated 11.8 million bales. USDA data indicates that approximately 245,000 bales must be shipped each week until the end of the marketing year. Total bales exported as a percent of the final crop are still below average for this point in the year.
A net total of 7,900 Pima bales were sold, and an impressive 5,800 bales were shipped. 90 percent of expected U.S. cotton acreage has been planted. In the U.S., 22 percent of the crop is now squaring. The good to excellent condition rating decreased to 54 percent from 56 percent. Texas has 43 percent of the crop rated good to excellent, Oklahoma has 86 percent, and Kansas has 58 percent. The last planting date in the Southwest passed this week. The crop seems to be progressing well but is spotty in some places. Although many areas have received adequate moisture, some could use more. The short-term forecast shows higher chances of precipitation and higher temperatures.
Crop development continues in South Texas. Tropical Storm Alberto made landfall this past week in Mexico, and parts of the Southwest received rainfall from the storm. South Texas received a significant amount of rain. Overall, the rain seemed beneficial, but some sunshine would be welcome. Two new disturbances are currently being monitored in the Atlantic, signaling what could be the start of a very active hurricane season.

On Friday, June 28, USDA will release the Initial Planted Acres Report at 11 a.m., the first acreage update since the Prospective Plantings report in March. These numbers will impact the July WASDE production expectations. The market will have a regular schedule next week. Economic data to watch will be the Gross Domestic Product (GDP) release on Thursday and the Personal Consumption Expenditure (PCE) on Friday, June 28.

As of Thursday afternoon, grower offers totaled 17,531 bales. On the G2B platform, 378 bales traded during the week with an average price of 58.00 cents/lb. The average loan was 47.16, bringing the average premium received over the loan to 10.84 cents/lb.

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