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Wednesday, June 19, 2024

Global cotton scenario of the week

Cotton trading in Pakistan has come to life with the arrival of the new crop from Sindh. Earlier the trading remained dull as last year’s left over stocks had quality issues and was mainly available in Punjab.

Now that the trading of new cotton crop of 2024-25 has started, the rate of fresh crop in Sindh ranged between Rs 21,000 to Rs 21,500 per maund. Rate of cotton in Punjab is obviously higher at Rs 22,000 per maund because the fresh crop has not arrived. The rate of new Phutti is in between Rs 9,000 to Rs 10.800 per 40 kg.

About 400 bales of Tando Adam were sold at Rs 21,000 per maund. 200 bales of Hyderabad were sold at Rs 21,550 per maund. The Spot Rate still remained unchanged at Rs 19,700 per maund, and Polyester Fiber was available at Rs 367 per kg.

Meanwhile the cotton sowing season has just finished in Punjab which has missed the cotton sowing target set for the 2024-25 season and failed to match last year’s sowing levels, according to official sources.

Farmers have been less enthusiastic about cotton cultivation this season mainly due to unfeasible cultivation economics and extreme weather patterns, including unprecedented hot conditions and canal water shortages, adds the official.

According to the officials, against the cotton sowing target of 4.15 million acres, it is estimated that about 3.4-3.5 million acres of land or approximately 19 per cent lesser of the target could best be brought under cotton cultivation in the ongoing season.

Initially, the provincial agriculture department was expecting that cotton sowing would be completed by mid-April. However, keeping in view the snail’s-pace progress in plantation due to multiple factors, the cultivation period was extended to end-May, but to no avail.

Terming it an alarming development, the officials say that one of the biggest shortfalls is being witnessed in the core cotton belt of south Punjab, especially in DG Khan, Multan and Bahawalpur Divisions. These three divisions occupy the lion’s share of 85 per cent in the total cotton area in the province.

Official figures suggest that DG Khan, Multan and Bahawalpur Divisions fell short in sowing target by 34 percent, 30 percent and 23 percent respectively. The last-ditch efforts by the provincial agriculture department to bring maximum area under cotton failed due to the severe and prolonged hot weather being witnessed for about a month.

The ongoing heatwave in excess to 4-6 degrees Celsius of normal summer temperatures burnt plants, wreaking havoc with newly sown seedlings as well as standing crops. The paradox of climate change unfolded in the harshest way in the ongoing year, first with below average temperatures in February and March and later with rains for early sown crop, inhibiting germination of cotton seeds.

Farmers had to re-sow crops due to a rare cold condition prohibiting seed germination and because of a phenomenon called ‘karand’ in the local language where seed could not sprout out of soil due to the hardening of surface after rains.

The late-sowing cotton crop met with the equally brutal weather event of the extremely hot weather of over 40 degrees C in the month of May, burning cotton sapling despite best efforts by the growers. Farmers initially tried to grow cotton through machine plantation, but it did not yield the desired results.

We are now appending below the latest prices of cotton from countries that produce almost 90 percent of global cotton. Pakistan and the United States are also among major producers but the trends in these economies are explained separately in this story.

The retail price range for Australian cotton is between US$ 4.13 and US$ 8.88 per kilogram or between US$ 1.88 and US$ 4.03 per pound(lb). The retail price range in Australian Dollar for cotton is between AUD 6.22 and AUD 13.36 per kilogram or between AUD 2.82 and AUD 6.06 per pound(lb) in Canberra and Melbourne.

The retail price range for Argentina cotton is between US$ 1.23 and US$ 1.27 per kilogram or between US$ 0.56 and US$ 0.57 per pound(lb). The retail price range in Argentine Peso for cotton is between ARS 286.16 and ARS 295.32 per kilogram or between ARS 129.78 and ARS 133.93 per pound(lb) in Buenos Aires and Cordoba.

The retail price range for Brazil cotton is between US$ 1.57 and US$ 1.65 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 7.83 and BRL 8.27 per kilogram or between BRL 3.55 and BRL 3.75 per pound(lb) in Brasilia and Rio de Janeiro.

The retail price range for China cottonseed oil is between US$ 8.34 and US$ 9.81 per kilogram or between US$ 3.78 and US$ 4.45 per pound(lb). The retail price range in Yuan Renminbi for cottonseed oil is between CNY 58.47 and CNY 68.79 per kilogram or between CNY 26.52 and CNY 31.20 per pound(lb) in Beijing and Shanghai.

The retail price range for India cotton is between US$ 0.58 and US$ 1.27 per kilogram or between US$ 0.27 and US$ 0.57 per pound(lb). The retail price range in Indian Rupee for cotton is between INR 48.43 and INR 104.94 per kilogram or between INR 21.96 and INR 47.59 per pound(lb) in New Delhi and Mumbai.

The retail price range for Kazakhstan cotton is between US$ 0.76 and US$ 1.21 per kilogram or between US$ 0.35 and US$ 0.55 per pound(lb). The retail price range in Tenge for cotton is between KZT 342.50 and KZT 541.93 per kilogram or between KZT 155.33 and KZT 245.77 per pound(lb) in Nur-Sultan and Almaty.

The retail price range for Mali cotton is between US$ 0.78 and US$ 1.56 per kilogram or between US$ 0.35 and US$ 0.71 per pound(lb). The retail price range in CFA Franc BCEAO for cotton is between XOF 474.24 and XOF 948.49 per kilogram or between XOF 215.08 and XOF 430.15 per pound(lb) in Bamako and Sikasso.

The retail price range for Portugal cotton is between US$ 2.23 and US$ 5.65 per kilogram or between US$ 1.01 and US$ 2.56 per pound(lb). The retail price range in Euro for cotton is between EUR 2.06 and EUR 5.22 per kilogram or between EUR 0.94 and EUR 2.37 per pound(lb) in Lisbon and Porto.

The retail price range for Turkey cotton is between US$ 2.39 and US$ 3.58 per kilogram or between US$ 1.08 and US$ 1.62 per pound(lb). The retail price range in Turkish Lira for cotton is between TRY 47.28 and TRY 70.92 per kilogram or between TRY 21.44 and TRY 32.16 per pound(lb) in Ankara and Istanbul.

The retail price range for Uzbekistan cotton is between US$ 0.48 and US$ 0.86 per kilogram or between US$ 0.22 and US$ 0.39 per pound(lb). The retail price range in Uzbekistan Sum for cotton is between UZS 5,993.13 and UZS 10,787.63 per kilogram or between UZS 2,717.97 and UZS 4,892.35 per pound(lb) in Tashkent and Samarkand.

In the United States the market finally felt some relief after weeks of selling and finished higher in four consecutive trading sessions as July futures gained 548 points from last week’s close, settling at 81.72 cents per pound. The July contract closed up the limit on Wednesday and had another strong rally on Thursday. The futures market appeared to be correcting its oversold status this week. The July contract passed its 10-day and 20-day highs, which helped trigger some buying.

The two days of significant gains caused daily volume traded to be heavy towards the end of the week. Total open interest added 6,737 contracts to reach a balance of 229,805. New additions were reported to certificated stock. An increase of 8,652 bales brings the total certificated stock to 191,522 bales.

 The stock market was shaky by the end of the week after inflation worries were renewed on stronger-than-expected economic data. The minutes from the last Federal Open Markets Committee meeting were released this week. The Fed continues to focus on inflation and is concerned about the slow progression towards their 2 percent goal.

U.S. existing home sales fell by 1.9 percent in April, pushed lower by higher mortgage rates and higher housing prices.  Nvidia reported stronger-than-expected earnings, which helped push the NASDAQ and S&P 500 to new highs. The House Ag Committee passed the Farm, Food, and National Security Act of 2024 within the committee after Thursday’s markup. The U.S. Dollar declined early in the week but recovered its losses after U.S. weekly jobless claims fell more than expected.

 U.S. export sales were surprisingly high for the week ending, but shipments are still behind the pace needed to reach USDA’s 12.3 million bale estimate. A net total of 202,900 Upland bales were sold, and 204,100 bales were shipped for the week. China was the biggest buyer of Upland cotton, with 104,400 bales, followed by Pakistan with 42,000 bales, Vietnam with 21,200 bales, Turkey with 15,000 bales, and Bangladesh with 4,700 bales. New crop sales were slower than usual for this point in the year. A net total of 47,900 bales were sold for the 2024/25 crop year. Pima sales and shipments were healthy this week. A net total of 9,900 Pima bales were sold, and 13,300 bales were shipped.

The market should be more active next week with the release of the U.S. Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) figures. According to this week’s Crop Progress report, 44 percent of the expected cotton acreage has been planted throughout the country. Planting in the Southwest continues to stay on pace with the 5-year average. Planting has progressed rapidly over the past week in West Texas, Oklahoma, and Kansas. The crop is up in South Texas but could benefit from rain soon.

As of Thursday afternoon, grower offers totaled 18,083 bales. On the G2B platform 13,130 bales traded during the week with an average price of 79.77 cents/lb. The average loan was 55.07 cents/lb bringing the average premium received over the loan to 24.70 cents/lb.

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