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All you need to know about cotton this week.

Textile Raw materials market
There was not much change in Pakistan’s cotton market which remained steady on Thursday. The trading volumes remained low because of a lack of interest by spinners that are operating on curtailed capacities.

Cotton rates in Sindh ranged between Rs17000 to Rs20000 per 37.324 kg. White gold fetched a better price in Punjab where it was traded in the range of Rs18000 to Rs21000 per 37.324 kg. The rate of Phutti in Sindh was between Rs5500 to Rs8300 per 40 kg. While Phutti was traded in Punjab between Rs6000 to Rs8500 per 40 kg. The KCA spot rate remained unchanged at Rs20000 per 37.324 kg. Polyester Fiber was available at Rs375 per kg.

In India, the prices of cotton in the futures trade and at the farm gate have declined 8 percent and 12 percent, respectively, in the last fortnight, as farmers, who were holding the crop expecting prices to return to last year’s record-high levels, have started selling their produce.

The daily arrival of cotton in the markets has increased fivefold to 100,000 bales (each weighing 170 kg) from the historical average of 20,000 bales a day in May. Experts say they have not seen such unusually high arrivals in May. The arrival of 100,00 bales a day is something that used to get over by January/February.

The June cotton contract on the MCX was down 3.05 percent on Monday. In spot trade, cotton prices dipped from INR62000/candy (each candy is 356 kg) to INR57000 in Maharashtra, while the price of raw cotton with seeds sold by farmers to ginners has fallen from INR8000/quintal a fortnight ago to INR7000-7200.

In the United States outside markets benefited from the optimistic outlook on the US debt ceiling. The exports from the United States were slower but shipments were stronger last week. Meanwhile, there is a forecast for scattered storms in the coming week in parts of the southwest.

July futures made substantial gains for the week, finishing higher in four out of the five trading sessions. The World Agricultural Supply and Demand Estimates (WASDE) released this past Friday gave the first glimpse at what the U.S. balance sheet will look like for the 2023/24 crop year. The report showed a tightening in the supply of U.S. cotton, providing a bullish sentiment in the market throughout the week. Optimism in outside markets provided an added boost to cotton prices towards the end of the week. Prices were pressured slightly on Thursday upon the release of a weaker Export Sales Report, causing buyers to pull back. July futures settled at 86.66 cents per pound, a gain of 704 points. July futures traded at the highest level since early February. Total open interest rose 8,028 contracts to finish at 185,468, its highest level since April 11.

U.S. stocks fared well this week, climbing upon optimistic news that the U.S. will raise its debt ceiling to avoid default. The rest of the week was relatively quiet in outside markets. April retail sales came in at a 0.4 percent month-over-month increase, rising less than the 0.8 percent expected. China had disappointing economic data, showing less than-ideal numbers where retail sales and employment is concerned. U.S. initial jobless claims fell unexpectedly to 242,000, showing a labor market that continues to be resilient through persistent inflation. Cotton prices turned higher this week, despite the U.S. dollar gaining ground from hawkish Fed comments and bullish economic reports.

U.S. Export Sales slowed for the week. Although sales of U.S. cotton were slightly weaker than expected, shipments continued at a strong pace. A net total of 132,400 Upland bales were sold for the 2022/23 crop year, and 28,100 bales for the 2023/24 marketing year. The biggest buyer for the week was China, with 62,000 bales purchased, followed by Vietnam with 24,000 bales, Pakistan with 18,900 bales, Turkey with 7,600 bales, and Indonesia with 5,200 bales. Shipments were healthy, with 332,700 bales leaving the U.S. for the week. The amount of cotton exported this week continues to stay above the pace to reach USDA’s export estimate of 12.6 million bales. Pima sales were also weaker with 9,500 bales sold, and 14,600 bales shipped.

Scattered storms brought much-needed moisture throughout areas in West Texas, Kansas, and Oklahoma over the past week. The rain was needed, but deep subsoil moisture remains dry. More precipitation is forecasted in the coming week, and many producers are trying to get seeds in the ground before the rain comes. South Texas received more rain throughout the week as well, and most areas in the region are now officially considered drought-free. The weather was more favorable this week, but sunshine and open skies are needed to ensure the proper development of the crop. This week’s Crop Progress report showed that 35 percent of the expected crop in the U.S. has been planted, which is right in line with the 5-year average of 35 percent. The Southwest has started to make headway where planting is concerned. Texas is 30 percent planted, Oklahoma is 16 percent planted, and Kansas is 35 percent planted.
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