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Saturday, July 13, 2024

Cotton scenario this week

The cotton market in Pakistan has not geared up as the new crop is slowly entering the market but given the stocks available in the market the trading was satisfactory. The rate of new cotton in Sindh is between Rs 18,400 to Rs 18,500 per maund. But the rate of Phutti in Sindh is still on the lower side being traded between Rs 8,300 to Rs 8,700 per 40 kg.

In Punjab, the cotton prices were on the higher side being Rs 19,000 to Rs 19,300 per maund. The rate of Phutti in Punjab is on the higher side as it was available between Rs 8,400 to Rs 9,200 per 40 kg. The rate of cotton in Balochistan is between Rs 18,300 to Rs 18,500 per maund and the rate of Phutti is between Rs 8,400 to Rs 8,500 per 40 kg.

Approximately, 1,000 bales of Tando Adam were sold at Rs 18,200 to Rs 18,500 per maund, 800 bales of Sanghar were sold at Rs 18,200 to Rs 18,400 per maund, 200 bales of Jam Sab were sold at Rs 18,200 per maund, 400 bales of Hyderabad were sold at Rs 18050 to Rs 18,300 per maund, 800 bales of Shahdad Pur were sold at Rs 18,000 to Rs 18,500 per maund, 200 bales of Vehari, 200 bales of Chichawatni, 100 bales of Burewala and 200 bales of Fazil Pur were sold at Rs 19,000 per maund. The Spot Rate remained unchanged at Rs 18,000 per maund. Polyester Fiber was available at Rs 375 per kg.

Elsewhere in the world, the cotton rates fluctuated in the top cotton-producing countries. The retail price range for Australian 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 Dollars 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 pesos 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 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 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 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 Indian 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 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 (Ib) in Beijing and Shanghai.

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 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 US cotton seeds is between US$ 0.96 and US$ 2.89 per kilogram or between US$ 0.44 and US$ 1.31 per pound(lb). The retail price range in Euro for cotton seeds is between EUR 0.88 and EUR 2.65 per kilogram or between EUR 0.40 and EUR 1.20 per pound(lb) in Washington and New York.

The retail price range for Pakistan cotton is between US$ 3.48 and US$ 6.81 per kilogram or between US$ 1.58 and US$ 3.09 per pound(lb). The retail price range in Pakistan Rupee for cotton is between PKR 994.83 and PKR 1,945.20 per kilogram or between PKR 451.17 and PKR 882.18 per pound in Islamabad and Lahore.

In the United States, the cotton futures traded higher for much of the week but fell lower on Thursday after a disappointing Export Sales Report. The December contract closed 196 points higher, settling at 74.58 cents per pound.

Cotton futures had a bullish run this week, finding support from fundamental and technical factors. Speculators currently hold a near-record short position, and the Indian Minimum Support Price was part of the reason for the rally. A dry and hot forecast for Texas also helped push prices up. Prices ran into resistance around 75.84 cents, and a disappointing Export Sales Report caused prices to retreat.

This past week was relatively quiet regarding daily volume traded. Total open interest decreased from 4,050 contracts to 212,438. Bales eligible for delivery against futures decreased substantially compared to the week prior. A total of 77,152 bales were decertified, bringing certificated stock to 59,035 bales.

In the U.S., 30 percent of the crop is now squaring, and 8 percent is setting bolls. The good to excellent condition rating increased to 56 percent from 54 percent. In Texas, 49 percent of the cotton crop rated good to excellent, 75 percent in Oklahoma, and 61 percent in Kansas. The USDA Acreage Report surprised the market by indicating that 11.67 million acres would be planted in the U.S. for the 2024/25 crop.

The prices referenced above do not reflect this report’s adverse impact on the market; given the Acreage Report’s significance, we felt it best to relay this information on the day of its release.

For reference, the market expected acreage to be closer to 10.8 million planted acres. The higher acreage caught the market off guard and was a bearish surprise to prices. The Prospective Plantings Report showed the intended plantings to be 10.23, meaning a 14% increase in acreage was reported.

The most significant increase came from Texas, where acreage increased by 900,000 acres to 6.4 million acres. Oklahoma’s acreage was lowered by 40,000 to 460,000 acres, and Kansas’s acreage stayed at 110,000 acres.

The Fed’s preferred inflation gauge showed the slowest pace of increase in inflation in 3 years. The U.S. Personal Consumption Expenditure (PCE) Index showed inflation rose 2.6 percent year-over-year and 0 percent month-over-month. This is still over the Fed’s 2 percent target but was aligned with expectations. The stock market reacted positively to this news and finished the week on a high note.

The Conference Board’s Consumer Confidence Index showed consumers are apprehensive about the U.S. economy. For June, confidence fell to 100.4, down from 101.3 reported in May. On Wednesday, the Japanese Yen hit its lowest level since 1986 after investors bet against it.

The U.S. Dollar hit an 8-week high the same day, and some support was found from weakness in the yen and hawkish Fed comments. Crude oil prices stayed higher due to concerns that global oil supplies would remain tight.

The U.S. Export Sales Report was overall disappointing for the week. For the current crop year, U.S. exporters sold a net total of 90,600 Upland bales and 67,600 bales for the new crop year. The combined sales were close to the average amount typically sold at this point in the year but below what has been reported in recent weeks.

Shipments of 141,000 Upland bales were far behind the approximate pace of 260,000 bales needed to reach USDA’s export estimate of 11.8 million bales. Total bales exported as a percent of the final crop are still below average for this point in the year.

A net total of 4,800 Pima bales were sold, and 6,200 bales were shipped.

Now that the market has a new acreage estimate, attention will shift to the next WASDE Report, released on July 12. The data from the Planted Acreage Report will be used to update the 2024/25 U.S. crop estimate.

As of Thursday afternoon, grower offers totaled 18,717 bales. On the G2B platform, 135 bales traded during the week with an average price of 55.05 cents/lb. The average loan was 44.36 bringing the average premium received over the loan to 10.69 cents/lb.

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