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All you need to know about cotton this week.

Textile Raw materials market
The cotton market opened this week after almost a week’s recess because of Eid Ul Adha and the mills rushed to buy the crop. The trading activity was satisfactory but the supplies remained tight.

As the demand increased it also impacted the cotton rates which forced the Karachi Cotton Association to increase the spot rates by Rs200 per 37.324 kg to Rs16700. The new crop from Sindh was available in the range of Rs17000 to Rs17200 per 37.324 kg. The rate of Phutti in Sindh remained well below the support price of Rs8500 per 40 kg. Phutti is being traded in Sindh in the range of Rs 6800 to Rs 7200 per 40 kg.

The rate of cotton in Punjab was slightly higher between Rs 17300 to Rs 17500 per 37.324 kg and the rate of Phutti ranged between Rs 7200 to Rs 8500 per 40 kg. The rate of cotton in Balochistan was quoted at 16800 to Rs 17000 per 37.324 kg while the rate of Phutti is between Rs 72,00 to Rs 8,500 per 40 kg.

On Thursday around, 800 bales of Jhole were sold at Rs 17000 per 37.324 kg, 1000 bales of Shah Pur Chakar were sold at Rs 16800 to Rs 16950 per 37.324 kg, 400 bales of Kotri were sold at Rs 16600 to Rs 17000 per 37.324 kg, 400 bales of Moro were sold at Rs 16,800 to Rs 16,850 per37.324 kg, 1400 bales of Mir Pur Khas were sold at Rs 16,575 to Rs 17,000 per 37.324 kg, 1800 bales of Shah Dad Pur were sold at Rs 16,500 to Rs 16,800 per 37.324 kg, 800 bales of Chichawatni were sold at Rs 17,000 to Rs 17,100 per 37.324 kg, 800 bales of Mian Channu were sold at Rs 17,100 to Rs 17,200 per 37.324 kg, 200 bales of Layyah were sold at Rs 16,900 per 37.324 kg, 200 bales of Khanewal, 200 bales of Sahiwal were sold at Rs 17,300 per 37.324 kg, 400 bales of Peer Mahal, 1600 bales of Burewala were sold at Rs 16,900 to Rs 17,200 per 37.324 kg and 400 bales of Sadiqabad were sold at Rs 17,000 per 37.324 kg.

Polyester Fiber was available at Rs 350 per kg.

In Australia, the crop is expected to be slightly lower than last year’s production of 5.6 million tons after a long dry spell in 2023 offset most of the damage done by floods in the last months of 2022. The authorities however have predicted much better quality of new crops with long staple fiber.

In the United States, December futures will remain the main focus of the traders for the next few months. The US export sales were surprisingly strong and as of June 25, around 95 percent of the crop has been planted.

With July futures all but gone, December futures will become the main focus in the months to come. Cotton-specific news was light this week, but trading ranges were volatile. December futures were under pressure most of the week but managed to find support late in the week. A delayed Export Sales Report last week pressured prices going into the weekend. China returned from holiday on Monday, and rumors swirled that the Reserve may start selling to the domestic market, which weighed on U.S. prices. An improvement in U.S. export sales and expectations of a supportive Acreage Report helped boost the market at the end of the week. For the week ending June 29, December futures settled at 79.03 cents per pound, down just 112 points despite a volatile week of trading. Total open interest increased to of3,478 contracts, bringing the total to 175,531.

The story seems to be the same as last week for outside markets. Geopolitical uncertainty concerning Russia and the war in Ukraine captured headlines over the weekend. Major indexes faced pressure throughout the week from more hawkish Fed comments and global banking concerns. A revision in the first quarter Gross Domestic Product (GDP) and weaker initial jobless claims provided support that the economy continues to be resilient. In addition to the hawkish Fed comments, the U.S. Dollar also found support from weaker currencies across the globe. A stronger U.S. Dollar is typically not good for cotton, but cotton chose to ignore the strength in the Dollar.

U.S. export sales were better than expected for the week. A net total of 125,600 Upland bales were sold for the 2022/23 crop year. The biggest buyer for the week was China, booking a total of 77,400 bales, followed by Vietnam with 37,500 bales, Taiwan with 4,400 bales, Pakistan with 4,400 bales, and Bangladesh with 4,400 bales. A total of 20,900 bales were canceled on this report, similar to what was reported last week. For the new crop year, 158,700 bales were booked. The combined total of sales was 284,300 bales, which the market looked at as a strong number of sales. A total of 225,200 bales were shipped for the week, which lags behind the pace needed to reach the USDA export estimate of 13.0 million bales. A net total of 3,600 Pima bales were sold for the 2022/23 crop year and 100 bales were sold for the 2023/24 crop year. Shipments of Pima totaled 15,000 bales, up substantially from the week prior.

As of Sunday, June 25, the Crop Progress and Condition report showed that 95% of the U.S. crop had been planted, slightly behind the 5-year average of 98%. Despite the heat present recently, crop conditions appeared to have slightly improved overall. For the country, 6% of the crop is rated as “Excellent”, 43% as “Good”, 33% as “Fair”, 12% as “Poor”, and 6% as “Very Poor”. A total of 28% of the crop is squaring across the country, and 5% of the crop is setting bolls. A heatwave was present across much of the Cotton Belt. Temperatures should ease in the coming week, but rain would be welcome to reduce stress on the crop in all areas.

USDA released the annual acreage report which provides an essential update on expected acreage for the 2023/24 crop year. A total of 11.087 million acres of cotton are expected to be planted in the U.S. The acreage report showed Texas planting 6.1 million acres of Upland cotton, 570,000 acres in Oklahoma, and 170,000 in Kansas. Texas was lower than what the Prospective Plantings report held, but Oklahoma and Kansas showed an increase in planted acres. Including the 17,000 acres of Pima cotton expected in Texas, the total planted acres expected in the Southwest is 6.857 million acres, right under the initial estimate of 6.88 million acres.
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