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Wednesday, June 19, 2024

Cotton’s position challenged by manmade fibers

Cotton is a major input of textile trade. Its position was challenged by manmade fibers produced mostly from fossil fuels in the 20th century. However, the emphasis on environmental purity is increasingly challenging the use of polyester and other related fibers as they are not decomposed on earth. Cotton also had its environmental challenges. Its high use of water and use of pesticides and artificial fertilizers became a source of concern for environmentalists. This matter has been resolved through better cotton practices. Another challenge that cotton faces these days is its recycling. Though cotton decomposes when buried in earth but now the emphasis is on recycling the cotton waste like the one done with other textile fibers. The movement has started recently but it would definitely dent the demand for virgin cotton in the long run. Already Bangladesh has announced that it would save $300 million on cotton imports by recycling its domestic cotton waste. Other countries will follow it.

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).

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 latest cotton rates from Cambodia were not available, but it is a major consumer of cotton. Its textile exports have surged $7.7B from $19.6B in 2016 to $27.3B in 2021. The most recent exports are led by Knit Sweaters ($2.47B), Trunks and Cases ($2.04B), Knit Women’s Suits ($1.84B), Non-Knit Women’s Suits ($1.52B), and Leather Footwear ($933M).

The retail price range for Australia 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 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.

The retail price range for China cotton is between US$ 0.74 and US$ 0.87 per kilogram or between US$ 0.34 and US$ 0.40 per pound(lb). The retail price range in Yuan Renminbi for cotton is between CNY 5.22 and CNY 6.11 per kilogram or between CNY 2.37 and CNY 2.77 per pound(lb) in Beijing and Shanghai.

In India, Today’s price of a Cotton 29mm is ₹57,980 and is witnessing a trend of 0.49 percent decline.

Meanwhile deputy chief minister Tamil Nadu Devendra Fadnavis has issued directions for registering offences if traders do not purchase cotton at the minimum support price (MSP). The mandate is not new but during the cabinet meeting held on Monday, Fadnavis again stressed on its implementation, apart from strict monitoring of cotton procurement.

Cotton growers of Vidarbha who had held on to their harvest hoping to get a better price are now dejected. In need of cash, farmers have begun selling cotton but they are getting a rate even below the MSP, which is at ₹7,020 a quintal for the long staple grade. Fadnavis said this is illegal for the traders to buy cotton below MSP. The market rates are anywhere between ₹6,800 to ₹6,500 if the cotton is taken to the ginning mill. If the grower sells directly from the farm, the rate is ₹6,100 to ₹6,000, said some farmers.

In the United States aftera slight dip to begin the week, cotton prices finished at their highest level since early October. Cotton made marginal gains despite the mixed data/news and general pressure on most of the commodity basket. Robust export sales/shipments and strong technical signals caused prices to spike on Thursday. March futures settled at 86.49 cents per pound, up 73 points for the week. Total open interest increased 16,790 contracts to 253,543. Fed rate cuts will not happen until the target rate is attainable.

Major stock indexes seesawed this week. Record highs were followed by a pullback after the FOMC decision, but they managed to recoup the losses by Thursday. Short-term interest rates will stick between 5.25 percent and 5.5 percent until the Fed has greater confidence that the target rate of 2% is attainable. The next Fed meeting is in May.

Data shows an increase in consumer confidence and an increase in job openings. Crude oil traded on both sides of the market on heavy geopolitical tensions and mixed economic news. Robust export sales and shipments for the week ending January 25.

The U.S. Export Sales Report was arguably the strongest report of the year thus far. 349,400 Upland bales were sold for the week, making it the fourth-highest week of sales. Sales for the next marketing year were healthy, with a net total of 25,200 bales reported. The most robust feature was shipments of 396,700 Upland bales, a high for the year. 13,500 Pima bales were sold, and 11,200 bales were shipped for the week.

The World Agricultural Supply and Demand Estimates (WASDE) Report will be released Thursday, February 8 at 11:00 a.m. CST. March options expire next Friday, February 9. The largest of the Index funds will begin to roll their positions forward next week.

As of Thursday afternoon, grower offers totaled 31,088 bales. On the G2B platform 13,302 bales traded during the week with an average price of 81.34 cents/lb. The average loan was 51.92 bringing the average premium received over the loan to 29.42 cents/lb.

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