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All you need to know about cotton this week.

Raw materials market Textile
Cotton rates in the Pakistani market are gradually inching up with spot rates of Karachi Cotton Association (KCA) increasing by Rs 200 per maund to close at a closed Rs 19,700 per 37.324 kg.

The market showed a bullish tendency and given the amount of cotton available, the trading volume was satisfactory for the sellers. Cotton in Sindh was available between Rs17000 to 20000 per 37.324 kg. The rates were higher in Punjab where cotton fetched between Rs18000 to Rs21000 37.324 kg.

The rate of Phutti was similarly a little higher in Punjab where it was available from Rs 6000 to Rs 8500 per 40 kg. In Sindh, its rate fluctuated between Rs 5500 to Rs 8300 per 40 kg. Only 100 bales of Sadiqabad were reportedly sold at Rs 20,500 for 37.324 kg. Polyester Fiber was available at Rs 373 per kg.

Globally Cotton futures were trading around 82 cents per pound in April, not far from an over four-month low of 76.3 cents on March 24th, on expectations of higher supply. In its latest April WASDE report, the U.S. Department of Agriculture forecasted that world production will be 829,000 bales higher compared with March, as a 1-million-bale increase in China more than offset a weaker Brazilian crop. World 2022/23 ending stocks are projected to be 867,000 bales higher, with the largest rise in India, where stocks are set to rise 450,000 on lower exports. Meanwhile, the 2022/23 global consumption is estimated to grow by 65,000 bales this month as a 500,000-bale increase in China outweighed declines in Bangladesh and Turkey.

Australia is also a major supplier of cotton to the global textile industry. In 2023, the approximate price range for Australia Cotton is between US$ 2 and US$ 2.01 per kilogram or between US$ 0.91 and US$ 0.91 per pound (lb). The price in Australian Dollars is AUD 2.58 per kg. The average price for a ton is US$ 1999.25 in Melbourne and Canberra.

Meanwhile in The United States recession fears kept major indexes at bay and the export demand slowed. There was little change in drought conditions across Texas, Oklahoma, and Kansas.

Cotton futures had a week of two-sided trading, with the lead contract finishing lower in three of the five trading sessions before ending the week strong. May futures were pressured on Friday when USDA released the Prospective Plantings report, which was higher than anticipated and showed planting intentions of 11.256 million acres of cotton. Macroeconomic news kept cotton prices mixed throughout the week, keeping futures in the middle of the long-term trading range. Despite lower export sales, May futures closed the week at 83.20 cents per pound, down 30 points for the week. Total open interest declined by 6,618 contracts to finish at 192,174, the lowest level since mid-March.

Stocks finished the first quarter on a high note, although recession fears and disappointing data kept major indexes at bay.

The Personal Consumption Expenditure (PCE), the Fed’s preferred measure of inflation, showed the core PCE Index rose 4.6 percent year-over-year in February. This slowed from the month prior and was lower than analysts expected. Jobs data released earlier this week has suggested the persistently strong labor market is starting to weaken. The U.S. Job Openings and Labor Turnover Survey (JOLTS) indicated that U.S. job openings dropped below 10 million in February, the first time this has happened in almost two years. Additionally, U.S. weekly initial unemployment claims rose to 228,000, another sign that the labor market is starting to crack. Crude prices shot up this week after a production cut was announced by the Organization of the Petroleum Exporting Countries (OPEC). Lastly, the U.S. Dollar Index had a mixed week, with much of the data released causing it to soften.

Despite the lower prices seen during the export sales reporting period, demand for U.S. cotton seemed to slow for the week. Net sales of 160,500 bales were booked for the current crop year, down substantially from what has been reported in recent weeks. The biggest buyer for the week was China, booking 64,400 bales, followed by Vietnam with 52,500 bales, Turkey with 16,200 bales, India with 6,200 bales, and Peru with 5,000 bales. Net sales of 15,900 were reported for the 2023/24 crop year. Shipments were slower compared to the week prior but held at a decent pace with a total of 250,100 bales exported. Pima sales remained steady, with a total of 9,100 bales sold for the 2022/23 crop year and 1,500 bales shipped.

Where most of the country has received an overabundance or adequate amount of precipitation in recent weeks that does not ring true for parts of Texas, Oklahoma, and Kansas. This portion of the Cotton Belt remains dry, with only intermittent storms expected in the coming week. In West Texas, blowing dust and high winds were present early in the week followed by cooler, which will fade going into the weekend. Warmer, seasonal temperatures are expected throughout the area in the next week. While this pattern is set to continue, we are getting to the point where warmer conditions will be present for longer periods of time. The final planting date in most southern areas of Texas has passed, and precipitation will be needed to encourage growth. With the final planting date approaching in other areas in South Texas, the scattered storms expected over the weekend will bring much-needed moisture to the dry soils.
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