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All you need to know about cotton this week.

Raw materials market Textile
The Spot Rate Committee of the Karachi Cotton Association (KCA) increased the rates by including Rs 235 as up country expense in the spot rate fixing the rates at Rs 17, 935 per maund.

Rains throughout Pakistan curtailed trading activities. Experts fear that further heavy rains in the cotton belt might damage the cotton crop. The local cotton market remained steady and the trading volume remained low.

The rate of new crops of cotton in Sindh ranged between Rs 17,700 to Rs 18,000 per maund. The rate of Phutti in Sindh continued to remain lower than the government fixed price ranging between Rs 7,000 to Rs 7,400 per 40 kg. The rate of cotton in Punjab was higher ranging between Rs 18,000 to Rs 20,000 per maund and the rate of Phutti was slightly better at between Rs 7,000 to Rs 8,300 per 40 kg. The rate of cotton in Balochistan is Rs 17,700 to Rs 17,800 per maund while the rate of Phutti is between Rs 7,200 to Rs 7,500 per 40 kg. Polyester Fiber was available at Rs 345 per kg.

Pakistan produces short-staple cotton suitable for denim products. However high fashion global brands use long staple and extra long staple cotton that is used to produce finer cotton fabric for high-valued products. Pakistan imports most of its LS and ELS from the United States.

The production of LS and ELS is on the rise as revealed by the latest report of the ICAC on specialty cotton. World cotton production in 2021/22 was 25 million tonnes, out of which ELS and LS cotton production were around 308,000 tonnes, while production under identity programs was about 6.83 million tonnes.


ELS and LS cotton comprised 1.7 percent of total world production while cotton production under identity programs comprised 27 percent of total world production in the 2021/22 season. Both production of ELS and LS cotton and under-identity programs reported an increase in 2021/22 compared to the previous season. Amongst the ELS and LS production, the US, Egypt, and India individually accounted for 0.3 percent of total world cotton production.

Amongst the identity programs, Better Cotton Initiative (BCI) and its equivalent have the largest market share and cover 21.8 percent of total world production, ABR program in Brazil covers around 8.5 percent of total world production, and cotton made in Africa covers around 2.8 percent of total world production. Another program growing quickly is myBMP in Australia, which in the last three seasons has increased its production from 31,000 to 382,000 tonnes.

In the US cotton futures settled Higher for four consecutive sessions as cotton futures settled higher for four consecutive trading sessions this week, with the December contract settling at its highest level in over two months. The cotton market found support from positive outside market data, deteriorating crop conditions in Texas, and news that China will start selling cotton out of the Reserve at the end of the month. For the week ending July 20, December futures settled at 84.31 cents per pound, up 263 points. Volume was heavier this week, and total open interest increased from 4,160 contracts to 182,144.

Macroeconomic data continues to send mixed signals where inflation is concerned, however, outside markets were positive for most of the week. Second-quarter earnings were reported, pushing the Dow to a 15-month high, but caused the NASDAQ and S&P 500 to slump. Although retail sales came in slightly below expectations, they still increased for the third straight month. Bank earnings reported in the second quarter also offered investors a bit of reassurance after the failures and losses that occurred in the first quarter. Much of this news has helped bolster optimism for the U.S. economy. The Federal Open Markets Committee (FOMC) meets on July 25 and 26 next week. Most traders have already been pricing in what they think will be the last 25-basis point rate increase for the year. Russia attacked a major grain terminal in Ukraine early this week, pushing grain and wheat prices up amid supply uncertainties. After tumbling last week, the U.S. Dollar found support when U.S. jobless claims reached a two-month low.

The U.S. Export Sales Report for the week held better news compared to the week prior. The market found support from the moderate sales and shipments that were reported. With only two weeks left in the 2022/23 crop year, a respectable net total of 67,100 Upland bales were booked. Demand for new crops continues to struggle and a net total of 86,100 bales were booked for the 2023/24 crop year. Shipments were up compared to last week, but the 233,100 bales exported still lag the pace needed to reach the USDA export estimate. Pima sales and shipments were comparable to the week before. A net total of 4,900 bales were sold for the 2022/23 crop year and 900 bales were sold for the 2023/24 crop year. Shipments were up for the week, with a total of 2,400 bales exported.

Excessively hot temperatures and dry weather have been persistent throughout the week in parts of Texas, Oklahoma, and Kansas. The hot, dry temperatures and minimal precipitation are forecast to continue in the coming week. This week’s Crop Progress and Condition Report showed that the heat stress has started to weigh on the overall condition of the Texas crop.

Next week will be another relatively quiet week where cotton news is concerned. Traders will continue to monitor the weather forecast, Export Sales report, and Crop Progress and Condition report. Macroeconomic data will likely have a greater impact on the FOMC rate decision early next week.
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