LAHORE: The local cotton market on Thursday remained dull while the trading volume remained very low. The Spot Rate remained unchanged. Cotton Analyst Nasseem Usman while talking to Business Recorder said that price of Punjab’s Phutti attracted per 40 kilograms prices from Rs 7000 to Rs 9000. Cotton of Sindh was traded from Rs 18000 to Rs 20,000 per maund, Punjab’s cotton was traded from Rs 18000 to Rs 20,000 per maund.
The Spot Rate remained unchanged at Rs 20,000 per maund. Polyester Fiber was available at Rs 268 per kg.
ICE cotton futures fell more than 2% on Wednesday, weighed down by a stronger dollar and as speculators squared positions ahead of a federal weekly export sales report.
The most active May cotton contract on ICE futures fell 2.30 cents, or 1.9%, to 120.45 cents per lb, at 11:18 am ET. Prices traded within a range of 120.01 and 123.12 cents a lb. “There seems to be some long liquidation and general profit taking going on,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
“I think the trend is generally up for cotton prices in near future.” The dollar index was up 0.3% against its rivals, making the natural fiber more expensive for overseas buyers.
US stock indexes rose on Wednesday after a bruising start to the week, as Federal Reserve Chair Jerome Powell signaled the central bank would start raising rates this month despite uncertainties stemming from the Ukraine crisis.
Investors now await the US Department of Agriculture (USDA) weekly export sales report due on Thursday. Last week, a report showed net sales of 247,200 running bales of cotton for 2021/2022.
“There is a narrative out there that demand destruction is going to happen and there is going to be larger cotton acres in the U.S. due to which big funds are hesitating to buy cotton,” said Louis Barbera, partner and analyst at VLM Commodities Ltd.
Total futures market volume fell by 19,400 to 13,556 lots. Data showed total open interest gained 1,718 to 238,940 contracts in the previous session. Cotton production in the 2021/22 season is currently projected to rise to 26.11 million tonne and consumption is likely to remain steady at 25.67 million tonne, as per the March 2022edition of Cotton This Month published by the International Cotton Advisory Committee.
The cotton industry today is struggling to supply the fibre to the spinners as the COVID pandemic has disrupted global shipping across many industries. But the cotton supply chain is longer and more complex than it is for most other commodities, especially since so much of the production in the West has to be shipped halfway around the world to the countries where it’s transformed into textiles.
Those challenges are forcing countries to adapt by streamlining their supply chains. China, Vietnam and Pakistan imported large amounts of cotton from the United States in 2020/21.
Given Australia’s geographic proximity to East and South Asia, this provides a distinct advantage to Australia when shipping ocean freight to Bangladesh, Pakistan and Vietnam. Australia is clearly capitalising on their increased production capacity and impressive yields, especially in the 2021/22 season.
The Secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 101 cents to 120 cents, with a midpoint at 109 cents per pound.
Copyright Business Recorder, 2022
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