Monthly Rate Movement Report – May 2022
Posted : September 30, 2023
Dear All Cotton Friends,
In our mission to give Daily Spot Rate Team Gujcot is getting valuable support from Gujcot broker’s panel. We appreciated their humble service to the trade. Gujcot Team is giving daily closing of Indian and foreign futures rates.
In this report we have provided Following Rates during the month.
- MCX Cotton Daily Closing Rate
- USD-INR Exchange Rate Closing
- NCDEX and MCX converted into Rs. Candy Rate
We hope it will be useful to all the stake holders of Textile Value Chain.
- Month of May was volatile month on NY futures. Front month July rose to new high of 151.95 cents with draught condition in Texas, Spec buying and mill fixation of on-call purchases. At the end of the month demand destruction due to lockdown in China and slow take off of finished goods at higher price drove the market to down side. Ultimately NY July closed with 665 points monthly loss.
- At the end of April, NY July December inverse was very high near 2359 points which narrowed by nearly 700 points during this month. Now inversion is 1653 points.
- Some rollover of fixation has brought down July open interest and December is gaining volume. Still 3.6 million bales needed to be fixed by buying July futures versus 334,600 bales requiring fixation by selling futures and time is running out before July enters its expiry period in 20 calendar days. December future will run on weather so it is hard to predict the market right now. But slow demand on higher prices is main driving factor for the market
- Export sales were beyond target but pace of shipment was lagging behind. Nine weeks remaining of current season. Shipment reached 99,95,901 bales, that means require pace of shipment is beyond 5 lakh bales and looks hard to achieve. We think USDA will reduce export target in June WASDE and US export carry forward and ending stock will go higher.
- In India availability of cotton was limited. Gins were running slow during this month. Rate of excellent quality cotton touched new high of near 110,000 Rs per Candy but softened in later part of the month. Gujcot Shankar-6 rate touched high of 103,000 Rs per Candy and soften below one lakh in later part of the month.
- Indian mills faces double trouble. Unavailability of raw material at fair price and compete with imported yarn in domestic market. After some import bargain of cotton yarn from Vietnam and Taiwan, sales of yarn slowed down and prices also softened. This double trouble forced Indian spinners to reduce their consumption which resulted pressure on cotton price.
- Indian basis is still very high so there is no chance of export of cotton as well as cotton yarn.
- Positive news for whole textile value chain is government of India has woken up to find solution of current low yield issue and established a cotton council to suggest solution to mitigate this problem.
- Next month majority of gins will close down and supply will be further reduced. It will be interesting to see battle between demand destruction and supply crunch. Which factor will drive the market we have to watch? weather also will play major role in driving the market direction.