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All you need to know about cotton this week.

Textiles and Сomposites Raw materials market
Pakistan’s cotton market on Thursday remained steady but the trading volumes remained low. The cotton rates in Sindh varied between Rs. 17,000 to Rs. 20,000 per 37.324 kg.

The rate of cotton in Punjab ranged from Rs18000 to Rs21000 per 37.324 kg. The rate of Phutti in Sindh remained between Rs5500 to Rs8300 per 40 kg. The rate of Phutti in Punjab was quoted between Rs6000 to Rs8500 per 40 kg.

800 bales of Deharki were sold at Rs 21,000 per 37.324 kg. (condition) and 600 bales of Rahim Yar Khan were sold at Rs21000 per 37.324 kg. (condition). The spot rate remained unchanged at Rs 20,000 per 37.324 kg. Polyester Fiber was available at Rs 375 per kg.

Indian cotton market is moving on its own having no relation to its rates in the global market. In last month’s Cotton ICAC Data Scientist, Matthew Looney reported that Indian cotton deliveries were far behind historical levels for that point of the season and suspected that farmers were withholding their cotton in the hope of better prices.

Whether they saw the recent, slight stabilization of prices and decided to take advantage, or whether they simply couldn’t hold the cotton any longer, it’s impossible to know. But whatever the reason, the pace of arrivals in India has surged in the last month or so.

In recent years in India, there has been increasing awareness of cotton production’s environmental and social impact, and efforts are underway to promote sustainable and eco-friendly practices. It’s part of the continuing evolution of one of the oldest cotton countries in the world, which is also highlighted in this edition of CTM.

The government in Uzbekistan is taking action to support cotton as well, holding a national referendum on several issues, including continuing to root out forced labor in the fields. It’s a clear sign that the country’s leaders are aware of the need to address issues that plagued cotton in Uzbekistan in the past.

The ICAC Secretariat’s current price forecast of the season-average A index for 2022/23 ranges from 96.1 cents to 111.3 cents, with a midpoint of 102.77 cents per pound.

In the United States, the focus has officially shifted to the July contract, which continued to trade in the lower end of the long-term range. July futures were pressured early on and experienced another selloff before recovering losses to finish the week. A combination of macroeconomic news and chances of rain in West Texas sent prices down sharply, where they reached the lowest close since March 24. A strong Export Sales Report and macro tailwinds pushed July prices back above 80 cents. July futures settled at 80.40 cents per pound, posting a moderate 31-point gain. Total open interest remains low, but traders added a total of 6,191 contracts to finish at 171,425.

Stocks had a rough start to the week with worries in the banking sector and recession woes weighing on markets. Recent data has shown that the economy seems to be slowing and the U.S. Gross Domestic Product (GDP) reported this week seemed to agree. U.S. GDP rose 1.1 percent since the previous quarter, which was weaker than the 1.9 percent that was expected and 2.6 percent reported in the previous quarter. Another sign of easing inflation came when U.S. pending home sales decreased an unexpected 5.2 percent in March, posting the biggest decline seen in 6 months. U.S. initial unemployment claims, which have been a key driver in Fed decisions recently, decreased to 230,000, showing a stronger-than-expected labor market. Additionally, strong corporate earnings helped rally stocks to finish the week. The Dollar was mixed throughout the week and posted moderate gains despite the rally in the stock market. Cotton has been heavily correlated with crude this year, which also had an up-and-down week. Like cotton, crude posted small gains to finish the week, despite other commodities finishing in the red.

The U.S. Export Sales Report showed a surprising increase in demand for U.S. cotton for the week ending April 20. Net sales of 194,400 Upland bales were reported for the 2022/23 crop year and 19,100 bales were sold for the 2023/24 marketing year. The biggest buyer for the week was Turkey, with 63,300 bales purchased, followed by China with 45,200 bales, Vietnam with 35,500 bales, Taiwan with 18,400 bales, and Pakistan with 11,800 bales. It should be noted that 61,000 of this report’s current marketing year sales and exports were reported late. The amount of cotton exported this week was one of the higher amounts shipped for the marketing year. A total of 398,400 bales were shipped for the week, which is far above the average needed to reach the USDA export estimate of 12.2 million bales. Pima had another solid week of sales and shipments. A net total of 16,700 Pima bales were sold and a marketing year high of 20,600 bales were shipped.

Scattered rain and severe storms were recorded over parts of West Texas, Oklahoma, and Kansas over this past week. Although the rain was welcomed, much more will be needed as planting decisions are being made. Another cold front is moving in, which will bring along winds and colder-than-average temperatures. Scattered storms are once again predicted, which will likely bring spotty precipitation throughout the region. The long-term outlook, however, has not changed much. Above-average temperatures and below-average rainfall are expected in the months to come. South Texas has received adequate moisture throughout the week, with sunny, warm temperatures expected to come. The warm weather and recent moisture will help crop development. This week’s Crop Progress report showed that planting is on schedule in Texas, with 18 percent of the expected acreage now planted, which is right in line with the five-year average of 16 percent.

From a cotton standpoint, no major reports are coming out next week. With the weather becoming more important, daily forecasts and the Crop Progress report will be looked at more readily. Following this week’s strong export sales, the Export Sales Report will be monitored to see if demand for U.S. cotton can hold steady.
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