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Friday, May 24, 2024

Global cotton scenario along with rates, production, and fluctuations!

Cotton rates both in Sindh and Punjab remained unchanged throughout the week. The undertone of the market remained bearish and trading volumes remained thin on all five trading days of the week. Economic uncertainty kept the buyers at bay.

As trading closed on Friday cotton in Sindh was quoted between Rs 17,500 to Rs 20,000 per 37.5 kg. In Punjab, the rate varied between Rs18000 to Rs20000 per 37.5 kg. On Friday the rate of Phutti in Sindh was between Rs 6500 to Rs8500 per 40 kg. Phutti was sold in Punjab for between Rs 7500 to Rs 9500 per 40 kg.

On the last trading day buyers generally lifted small lots.  200 bales of Ghotki, 200 bales of Sarhad were sold at Rs 19200 per 37.5 kg, 200 bales of Saleh Pat fetched at Rs18500 per maund, 600 bales of Rohri were sold at Rs17500 to Rs18500 per 37.5 kg, 1200 bales of Khan Pur were sold at Rs19000 to Rs19500 per 37.5 kg, 200 bales of Chichawatni, 600 bales of DG Khan, 400 bales of Layyah and 400 bales of Tounsa Shareef were taught by the buyers at Rs19500 per 37.5 kg The local cotton market opened on Monday after two days of recess on subdued not remaining with low trading volumes. The rate of cotton stayed put in Sindh at Rs17500 to Rs20000 per 37.5 kg and in Punjab at Rs18000 to Rs20000 per 37.5 kg. The local market on Tuesday remained bearish and the trading volume remained low. Cotton was priced between Rs17500 to Rs20000 per 37.5 kg while in Punjab it ranged from Rs18000 to Rs20000 per 37.5 kg.

The local cotton market on Wednesday remained bearish and the trading volume remained low. Cotton traded in Sindh between Rs17500 to Rs20000 per 37.5 and between Rs18000 to Rs20000 per 37.5 kg. Leading cotton-producing states in India have reported the arrival of 138,900 bales of cotton on Thursday, as compared to 144000 bales received on Wednesday. The average cotton price in India was INR7416.31/Quintal.

The prices fluctuated according to the quality of the commodity. The lowest quoted price was INR2300.00/Quintal and the maximum price fetched by better quality cotton was INR8800.00/Quintal. China Settlement Price: ZCE: Cotton: 2nd Month data was reported at 14,475.000 RMB/Ton on 23 Feb 2023. This records an increase from the previous number of 14,470.000 RMB/Ton for 22 Feb 2023. China Settlement Price: ZCE: Cotton: 2nd Month data remains active status in CEIC and is reported by Zhengzhou Commodity Exchange. The data is categorized under World Trend Plus’s Commodity Market.

In the United States cotton market had a choppy week, trading within a tight range before falling to the lower end of prices that have been present for the past few months. Although wide trading ranges were present day-to-day, cotton futures settled relatively unchanged until Wednesday. Futures fell apart after hawkish macroeconomic news was reported and the Dollar rallied. The downfall continued into Thursday, and March futures settled at 81.25 cents per pound, down 425 points for the week ending February 16. The first notice day is next week, meaning the focus will officially shift to the May contract. May futures settled at 82.00 cents, down 394 points from the week prior and falling to a six-week low. Total open interest followed futures and declined 13,195 contracts to finish the week at 194,648.

After recording losses across the board going into the week, ends on Feb 17. Stocks started the week off strong, anticipating what would be reported with the Consumer Price Index (CPI), Retail Sales, and Producer Price Index (PPI). On Tuesday, CPI increased 6.4 percent compared to this time last year. While down 0.1 percent compared to the month prior, this number was higher than expected and outside markets wavered because of it. After two months of reported decreases, U.S. Retail Sales rose by 3 percent in January, showing resilience in the consumer. Producer Price Index also came in hotter than expected. In addition, initial jobless claims fell to 194,000, showing a persistently strong labor market.

The Dollar also rallied to highs not seen in over a month, adding pressure to commodity markets. While the economic news received throughout the week was mixed, it created an overall hawkish tone in the market Solid export sales were reported for the week. Net sales of 216,900 Upland bales were reported for the 2022/23 crop year and 23,900 bales for the 2023/24 year. The largest buyers included Vietnam (67,700 bales), China (61,600 bales), Pakistan (23,200 bales), Bangladesh (17,000 bales), and South Korea (15,500 bales). The 186,400 bales exported for the week were disappointing compared to the recent shipment numbers that have been reported, keeping shipments below the pace needed to reach USDA’s export goal of 12 million bales. A net of 2,000 Pima bales was booked and 6,900 bales exported, showing that both sales and shipments of Pima have improved from the week prior.

The United States is expected to export 12.5 million bales and have ending stocks of 5.3 million bales. With recent events and cotton’s performance against other crops, it is hard to forecast where acreage will fall. Next week, USDA will host the Agricultural Outlook Forum, which is their initial forecast for the agricultural economy and will be another good indicator of what will happen with cotton acreage in the upcoming marketing year.

Where parts of Texas have been lacking rain recently, the wind and dust storms have more than taken the moisture’s place. Dust storms across West Texas did little to help the current drought conditions. The storm systems that have moved throughout parts of Texas, Oklahoma, and Kansas have brought along spotty moisture, but not providing anything significant enough to change the near-term outlook. The eastern part of the Cotton Belt has received adequate precipitation recently, allowing most areas to be pulled out of drought. Long-term, a milder start is expected to start the 2023 growing season. Although long-range models are not forecasting significant moisture in the spring, anything can happen from now until the final planting dates.

Last week was relatively calm compared to the past couple of weeks, helped by the market being closed for the President’s Day holiday. The always-changing interpretation of what the Fed will do with interest rates continues to keep outside markets mixed, which overflows into the cotton market. The events in Turkey last week and currency issues in Pakistan will continue to weigh on the market and will be monitored in the weeks to come. Finally, the Export Sales Report will continue to be key to gauge where demand for cotton lies.

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