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Tuesday, May 28, 2024

Global cotton scenario this week

Cotton market in Pakistan remained mostly closed throughout the week due to prolonged Eid holidays. Even otherwise the mills are not in buying mood.

Elsewhere in the world the cotton prices in most textile producing countries varied. The retail price range for Australian cotton is between US$ 4.14 and US$ 8.90 per kilogram or between US$ 1.88 and US$ 4.04 per pound(lb). The retail price range in Australian Dollar for cotton is between AUD 6.23 and AUD 13.38 per kilogram or between AUD 2.83 and AUD 6.07 per pound(lb) in Canberra and Melbourne. The retail price range for New Zealand cotton 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 3.81 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$ 1.14 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 14,308.50 and IDR 19,078.00 per kilogram or between IDR 6,489.12 and IDR 8,652.15 per pound(lb) in Jakarta and Surabaya. The retail price range for Vietnam cotton is between US$ 1.45 and US$ 2.42 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 36,330.00 and VND 60,550.00 per kilogram or between VND 16,476.19 and VND 27,460.32 per pound(lb) in Hanoi and Ho Chi Minh City.

The retail price range for Cambodia cotton is between US$ 0.24 and US$ 0.43 per kilogram or between US$ 0.11 and US$ 0.19 per pound(lb). The retail price range in Riel for cotton is between KHR 993.23 and KHR 1,787.81 per kilogram or between KHR 450.44 and KHR 810.80 per pound(lb) in Phnom Penh and Siem Reap. The retail price range for Bangladesh cotton is between US$ 0.94 and US$ 1.66 per kilogram or between US$ 0.43 and US$ 0.75 per pound(lb). The retail price range in Taka for cotton is between BDT 101.48 and BDT 178.64 per kilogram or between BDT 46.02 and BDT 81.02 per pound(lb) in Dhaka and Chittagong (Chattogram).

The retail price range for South Africa cotton is between US$ 2.92 and US$ 3.89 per kilogram or between US$ 1.32 and US$ 1.76 per pound(lb). The retail price range in Rand for cotton is between ZAR 56.64 and ZAR 75.52 per kilogram or between ZAR 25.69 and ZAR 34.25 per pound(lb) in Johannesburg and Cape Town. The retail price range for Brazil cotton is between US$ 1.59 and US$ 1.68 per kilogram or between US$ 0.72 and US$ 0.76 per pound(lb). The retail price range in Brazilian Real for cotton is between BRL 7.95 and BRL 8.40 per kilogram or between BRL 3.61 and BRL 3.81 per pound(lb) in Brasilia and Rio de Janeiro.

The retail price range for Italian cotton is between US$ 8.71 and US$ 24.21 per kilogram or between US$ 3.95 and US$ 10.98 per pound(lb). The retail price range in Euro for cotton is between EUR 8.05 and EUR 22.37 per kilogram or between EUR 3.65 and EUR 10.14 per pound(lb) in Rome and Milan.

The retail price range for Spain cotton is between US$ 3.37 and US$ 4.33 per kilogram or between US$ 1.53 and US$ 1.97 per pound(lb). The retail price range in Euro for cotton is between EUR 3.11 and EUR 4.00 per kilogram or between EUR 1.41 and EUR 1.82 per pound(lb) in Madrid and Barcelona.

The retail price range for Turkey cotton is between US$ 2.43 and US$ 3.65 per kilogram or between US$ 1.10 and US$ 1.66 per pound(lb). The retail price range in Turkish Lira for cotton is between TRY 48.21 and TRY 72.32 per kilogram or between TRY 21.86 and TRY 32.80 per pound(lb) in Ankara and Istanbul.

As the cotton futures ease on muted global demand and prospects of a better crop in countries such as Australia, the multinational traders in the Indian market have started off-loading their stocks..

The May cotton futures contract on ICE, which touched a high of 103.80 cents on February 28 has eased to a level of 85.89 cents on April 10. The December 2024 contract on ICE is hovering around 82 cents. Trade sources said the international prices have eased by around 17-18 per cent from the high it achieved recently, on weak global demand led by countries like China, while the domestic prices are also down by 8-9 per cent from their recent highs.

Multinationals have started selling for the April, May, June and July delivery. Cotton prices are hovering in the range of ₹60,000-₹62,000 per candy, about 3 per cent lower than the prices, a month earlier. Cotton sold by multinationals such as Viterra, COFCO International and Louis Dreyfus Company among others is being bought by traders and mills.

Most of the North Indian cotton mills have covered for the next six months. Mills are also buying need-based because there is no bulk movement of yarn. Buyers are very cautious because there is not much demand for yarn at higher prices.

In the United States May cotton futures finished below 90 cents per pound after falling under pressure for three consecutive sessions. May futures settled at 87.14 cents per pound, finishing 424 points lower for the week. This is the contract’s lowest close since January 31.

Fundamental news in the cotton market was relatively light this week. Higher prices in China and continued competition from Brazil provided the market with mixed signals. Most of the selling pressure was due to speculative liquidation and chart-based selling.

Total open interest remains at a high level. A balance of 280,751 contracts was reported, increasing 2,174 contracts from the week prior. Certificated stocks have reached their highest level since August 2021. They were last reported at 92,654, an increase of 40,430 from the week prior.

Major indexes had a mixed week but finished lower on hawkish Fed comments. A slew of jobs data was released this week. ADP nonfarm employment increased more than expected, adding 184,000 jobs in the private sector in March.

Weekly U.S initial jobless claims were slightly above expectations but remain historically low. The Labor Department reported that 303,000 jobs were added in March, and the unemployment rate fell to 3.8%. This week’s jobs data surpassed expectations and will likely be accounted for in the Fed’s upcoming decision concerning interest rates. The U.S. trade deficit widened for the third consecutive month, reaching 68.9 billion dollars. Crude oil prices reached their highest level in 5 months on a lower U.S. Dollar and continued heightened geopolitical risks.

U.S. export sales were slightly below expectations, but shipments remained steady for the week. A net total of 84,900 Upland bales were booked, and 367,600 bales were shipped during the reporting period. This week’s sales are below the weekly pace needed to reach USDA’s export estimate of 12.3 million bales, but shipments remain above pace.

New crop sales of 22,900 bales were below average for this point of the year, decreasing from last week.  A net total of 1,400 Pima bales were sold, and 5,200 bales were shipped for the week. First notice day for the May contract is April 24, less than two weeks away. Aside from potentially heavier flows, the U.S. Export Sales Report will continue to be the central focus.

The Consumer Price Index (CPI) and Producer Price Index (PPI) will be released next week, giving the Fed insight into inflation before the FOMC meeting at the end of the month. Next week, the World Agricultural Supply and Demand Estimates (WASDE) will be released on May 11, and May cotton options expire on May 12.

The seasonal drought outlook was released this week and showed that drought development is likely in parts of Texas. As of Thursday afternoon, grower offers totaled 40,951 bales.  On the G2B platform 419 bales traded during the week with an average price of 71.22 cents/lb.  The average loan was 48.76 cents/lb, bringing the average premium received over the loan to 22.46.

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