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The global cotton scenario report includes prices and fluctuations.

Textile Raw materials market
The cotton market opened last Monday on a positive note. Demand and price of cotton yarn had started to improve to some extent. But by this weekend cotton prices started declining.

The market was positive on Monday in hopes of a deal with the IMF, the value of the US dollar has started falling, and due to this cotton prices have started to decline. In preparation for the upcoming cotton season, cotton sowing has partially started in some cotton-producing areas of Sindh. The sowing of cotton has partially started in the cotton-growing areas of Lower Sindh.

On Monday, Feb 13, the rate of cotton in Sindh was between Rs 19,500 to Rs 22,500 per maund while the rate of Phutti was between Rs 6,500 to Rs 9,000 per 40 kg. The rate of cotton in Punjab was between Rs 20,000 per maund to Rs 22,500. The rate of Phutti was between Rs 7,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola, and oil remained stable.

On Thursday, Feb 16, the rate of cotton in Sindh declined to between Rs 18,000 to Rs 20,500 per maund. The rate of cotton in Punjab was reduced from Rs 19,000 to Rs 21,000 per maund. The rate of Phutti in Sindh stayed at Rs 6,500 to Rs 9,000 per 40 kg. The rate of Phutti in Punjab also remained unchanged at Rs 7,500 to Rs 10,500 per 40 kg.

In neighboring India the minimum sales price (MSP) for cotton has been increased by Rs. 355 to Rs. 6380 per quintal for marketing season 2022-23 from Rs.6025 per quintal in 2021-22. New cotton arrivals started all over India. Currently, cotton prices are ruling above MSP i.e., Rs. 6380 per quintal.

In the US past week was a busy week in the cotton market, with many noteworthy fundamental factors taking place. Futures went into the weekend pressured by a strong jobs report. The downward pressure, paired with geopolitical issues, continued to start the week pushing cotton futures lower for the second day. Prices rallied Tuesday as the S&P GSCI Roll Period began with volume jumping to the highest level since February 2021.

The release of the WASDE had the market moving back and forth before eventually settling slightly lower for the day. Although the Export Sales Report showed the best week of sales for the marketing year, it did little to help boost the market. March futures closed at 85.50 cents per pound for the week ending February 9, down 89 points from last week. With First Notice Day coming up, the focus will begin to shift to the May contract. May futures also fell from the week prior finishing the week at 85.94 cents, down 116 points. After reaching the highest level since November 2021, total open interest eventually declined by 2,573 contracts to finish the week at 207,843.

Memphis-based National Cotton Council (NCC) held its annual meeting this week in Dallas and released data on the early season planting intentions of cotton production in the United States. This survey, conducted last December, found that cotton growers intend to plant 11.4 million acres of cotton this spring, down 17 percent from 2022. Upland cotton intentions are 11.2 million acres, down 17.3 percent from 2022, while extra-long staple (ELS) intentions of 184,000 acres represent a 0.5 percent increase, the report found.

Dr. Jody Campiche, the NCC’s vice president for economics & policy analysis, commented: “History has shown that US farmers respond to relative prices when making planting decisions. Relative to the average futures prices during the first quarter of 2022, cotton prices are lower while the prices of most competing commodities are relatively unchanged. Price ratios of cotton to corn and soybeans are at the lowest level since planting the 2009 crop. In addition, production costs remain elevated.”

The Export Sales Report showed the highest level of sales for the current marketing year, with exporters booking 262,800 Upland bales. The largest buyers included China (87,700 bales), Turkey (72,600 bales), Vietnam (45,300 bales), and Indonesia (16,600 bales). While shipments were strong at 210,000 bales, it is still below the pace needed to reach the USDA export estimate of 12 million bales. Pima sales increased compared to last week with a net total of 1,400 bales sold for the current crop year. Shipments, however, were down slightly with exports of 5,800 bales reported.

The World Agricultural Supply and Demand Estimates (WASDE) held a few surprises in the report that came out on February 8. The previous reports for the marketing year have contained changes that shocked the market, so having one in line with expectations was refreshing. The U.S. side of the balance sheet held minor changes with consumption decreasing to 2.1 million bales and ending stocks increasing to 4.3 million bales. The U.S. crop was kept at 14.68 million bales and exports stayed the same at 12.0 million bales. The February WASDE usually holds minor revisions for the U.S. and while it was ideal to see the numbers reported as expected, it is still believed production is too high and exports are too low. Revisions are expected on the March report.

The global side of the balance, however, did have a few noteworthy changes. The Indian crop decreased by 1 million bales to 25.5 million bales. In turn, global consumption decreased by 190,000 bales to 110.66 million bales, and ending stocks decreased by 850,000 bales to 89.08 million bales.

With regards to the global outlook for the coming year, the NCC estimates that world production will increase slightly to 115.9 million bales in 2023/24 due to an increase in harvested acreage, the lifting of covid restrictions in China, and an expectation of improving global economic conditions.
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