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Tuesday, May 28, 2024

Global cotton scenario of the week

The Karachi Cotton Association (KCA) after the meeting of its Spot Rate Committee on Thursday decreased the spot rate by Rs 8,00 per maund and closed it at Rs 20,800 per maund.

The Pakistani domestic market remained dull with almost negligible trading volumes. Cotton rates in both Sindh and Punjab ranged between Rs 20,000 to Rs 22,000 per maund, while phutti prices in Punjab were observed between Rs 9,500 and Rs 10,000 per 40 kg.

1,000 bales of Kotri and 1,000 bales of Hyderabad were sold at Rs 20,000 per maund. Polyester Fiber was available at Rs 367 per kg.

Indian media reports that cotton is faced with severe pink bollworm infestation, weak prices and rising costs. Farmers in North India may opt for paddy, guar, and maize. With the 2024-25 kharif cotton plantings set to begin in North India, stakeholders see a dip in acreages as weak prices for the fiber crop coupled with severe infestation of pink bollworm (PBW) witnessed last season and rising labor costs may prompt farmers to look at safer bets like paddy, maize and guar.

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 cotton in New Zealand is between US$ 1.90 and US$ 2.40 per kilogram or between US$ 0.86 and US$ 1.09 per pound(lb). The retail price range in New Zealand Dollar for cotton is between NZD 3.03 and NZD 3.82 per kilogram or between NZD 1.37 and NZD 1.73 per pound(lb) in Wellington and Auckland. The retail price range for Indonesian cotton is between US$ 0.86 and US$ 1.15 per kilogram or between US$ 0.39 and US$ 0.52 per pound(lb). The retail price range in Rupiah for cotton is between IDR 14,334.00 and IDR 19,112.00 per kilogram or between IDR 6,500.68 and IDR 8,667.57 per pound(lb) in Jakarta and Surabaya.

The retail price range for cotton in Vietnam is between US$ 1.46 and US$ 2.43 per kilogram or between US$ 0.66 and US$ 1.10 per pound(lb). The retail price range in Dong for cotton is between VND 36,431.25 and VND 60,718.75 per kilogram or between VND 16,522.11 and VND 27,536.85 per pound(lb) in Hanoi and Ho Chi Minh City. The retail price range for cotton in Cambodia is between US$ 0.24 and US$ 0.44 per kilogram or between US$ 0.11 and US$ 0.20 per pound(lb). The retail price range in Riel for cotton is between KHR 1,013.96 and KHR 1,825.13 per kilogram or between KHR 459.85 and KHR 827.72 per pound(lb) in Phnom Penh and Siem Reap. The retail price range for cotton in Thailand is between US$ 1.45 and US$ 3.39 per kilogram or between US$ 0.66 and US$ 1.54 per pound(lb). The retail price range in Baht for cotton is between THB 49.82 and THB 116.25 per kilogram or between THB 22.60 and THB 52.72 per pound(lb) in Bangkok and Chiand Mai.

The retail price range for cotton in Myanmar is between US$ 0.72 and US$ 2.16 per kilogram or between US$ 0.33 and US$ 0.98 per pound(lb). The retail price range in Kyat for cotton is between MMK 1,530.16 and MMK 4,590.48 per kilogram or between MMK 693.95 and MMK 2,081.85 per pound(lb) in Naypyitaw and Yangon. The retail price range for Bangladesh cotton is between US$ 0.92 and US$ 1.61 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 98.53 and BDT 173.45 per kilogram or between BDT 44.68 and BDT 78.66 per pound(lb) in Dhaka and Chittagong (Chattogram). In India, Today’s price of a Cotton 29mm is ₹57,140 and is witnessing a declining trend of 1.11 percent.

The retail price range for cotton in Turkey 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 Spain cotton is between US$ 3.41 and US$ 4.39 per kilogram or between US$ 1.55 and US$ 1.99 per pound(lb). The retail price range in Euro for cotton is between EUR 3.15 and EUR 4.06 per kilogram or between EUR 1.43 and EUR 1.84 per pound(lb) in Madrid and Barcelona. The retail price range for Italy cotton is between US$ 8.76 and US$ 24.35 per kilogram or between US$ 3.97 and US$ 11.04 per pound(lb). The retail price range in Euro for cotton is between EUR 8.09 and EUR 22.50 per kilogram or between EUR 3.67 and EUR 10.20 per pound(lb) in Rome and Milan. The retail price range for cotton in Portugal 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 cotton in Brazil 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 cotton in Mexico is between US$ 1.51 and US$ 1.56 per kilogram or between US$ 0.68 and US$ 0.71 per pound(lb). The retail price range in Mexican Peso for cotton is between MXN 26.81 and MXN 27.66 per kilogram or between MXN 12.16 and MXN 12.54 per pound(lb) in Mexico City and Guadalajara. The retail price range for Honduras cotton is between US$ 1.48 and US$ 5.43 per kilogram or between US$ 0.67 and US$ 2.46 per pound(lb). The retail price range in Lempira for cotton is between HNL 36.43 and HNL 133.57 per kilogram or between HNL 16.52 and HNL 60.57 per pound(lb) in Tegucigalpa and San Pedro Sula. Cotton futures continued to fall during a busy, data-driven week.

In the United States May futures settled at 83.37 cents per pound, finishing 377 points lower for the week. With May First Notice Day less than two weeks away, the July contract will start to take focus. July futures settled at 85.25 cents per pound, finishing 332 points lower for the week.

Fundamental, technical, and macroeconomic news kept the market moving this week. Selling pressure came from continued speculative liquidation, index rolling, and rain in West Texas. The May and July contracts crossed below the 200-day moving average. Daily volumes were heavy this week as major indexes continued to roll their positions forward. Total open interest decreased by 47,480 contracts to reach a balance of 233,271. Certificated stocks have reached their highest level since June 2021. They were last reported at 155,045, an increase of 62,391 from the week prior.

The U.S. Consumer Price Index (CPI) came in hot, prompting questions on how many interest rate cuts will happen this year. CPI increased 3.5 percent year-over-year, rising more than expected, causing a sell-off on Wednesday. The Producer Price Index (PPI) came in slightly below expectations, rising 2.1% year-over-year. This helped markets recover from Wednesday’s sell-off, but the gains were limited due to lower weekly jobless claims.

The European Central Bank kept interest rates unchanged for April but signaled cooling inflation should allow interest rates to be cut soon. After the stronger-than-expected inflation data, the U.S. Dollar rallied to an almost 5-month high this week, putting additional pressure on commodities.

U.S. export sales and shipments remain steady for the week. A net total of 81,500 Upland bales were booked, and 274,100 bales were shipped during the reporting period. A total of 48,900 bales were cancelled this week, 24,400 from Turkey and 11,000 from China. New crop sales of 35,700 bales continue to be below the average typically sold at this point in the year. A net total of 1,400 Pima bales were sold, and 5,200 bales were shipped for the week.

The April World Agricultural Supply and Demand Estimates (WASDE) release was lackluster, with the U.S. side of the balance sheet unchanged. U.S. production was held at 12.1 million bales, exports kept at 12.3 million bales, and ending stocks at 2.5 million bales. Significant changes to the U.S. side do not typically occur in the April report, so this report was as expected. For the world side of the balance sheet, consumption decreased by 120,000 bales to 112.82 million bales. Ending stocks were also lowered by 260,000 bales to 83.08 million bales. 

Next week is the last full week of trading before the first notice day of the May contract, which is on April 24. The U.S. Export Sales Report will remain a central focus, but the Crop Progress Report will move back into rotation of normal weekly reports for traders to review.  After a busy, data-filled week, next week’s news will be light. U.S. retail sales for March will be released on Monday.

Planting continues in South Texas, and the cotton that has emerged in the most southern areas benefited from the moisture. The precipitation that fell in other areas in the Southwest was much needed.

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