Market Movement from 08th May 2023 to 13th May 2023.
The New York Cotton future for July showed a decline from 83.90 cents on 05-May to 80.53 cents on 12-May, resulting in a weekly loss of 3.37 cents.
The cotton market saw some fluctuations this week, with a rally last week followed by a retreat on Monday. The market saw triple-digit losses on Tuesday due to bearish rain forecasts and weak Chinese economic data, and some more loss on Wednesday. The market was lower again on Thursday due to breaking outside markets and negative Chinese inflation data. Overall, rising interest rates and slow global economic recovery continue to impact prices.
The U.S. cotton export sales for the 2022-2023 season were strong, with net upland sales of 246,800 bales and net Pima sales of 15,200 bales, totaling 262,000 bales. Upland and Pima shipments for the week were 331,000 bales and 20,300 bales, respectively. However, net sales for the 2023-2024 season were lower at 12,800 bales for upland, with no reported net Pima sales. Overall, there are signs of healthy demand for cotton, but some uncertainty for the upcoming season.
The USDA's World Agricultural Supply and Demand Estimates (WASDE) report for May 2023 projects a rise in U.S. cotton production for 2023/24 despite a decrease in planted acreage, with abandonment expected to be lower than the previous year but still above average. Global cotton supplies are projected to be higher than the previous year due to higher beginning stocks, and also consumption is expected to rebound. However, production is expected to fall slightly due to lower harvested area in some other countries. The report also shows higher global production and lower use for 2022/23, with projected ending stocks higher than the previous month.
The sharp decline in Indian cotton production was due to farmers’ firm holding. It is noteworthy that for the first time in history, we have witnessed an arrival of over one lakh (100,000) cotton bales in the month of May.
The declining cotton seed rate (falling below the Rs 3000 per quintal level) along with a sharp downtrend in cotton prices has caused panic in kapas prices (seed cotton price).
Mills are unable to find yarn buyers even at lower rates, which has led to a restriction in mill buying of cotton at lower rates as well.
The overall slow mill buying, coupled with farmers selling and some inventory being held by ginners, has caused sharp downfall in cotton prices. Additionally, the back-to-back New York futures have dropped over 300 points week-over-week, with all bearish factors prevailing this week.
Next week, it is expected that there will continue to be sluggish buying from mills. It will be interesting to see whether farmers will apply pressure by selling their crops or if they will remain calm, as this will play a significant role in determining the price action for next week.
Cotton market experienced a significant decline in prices this week, with Gujcot Spot Rate at 61,600 on Monday and gradually decreasing to 59,800 by Saturday.
The Indian rupee weakened against USD. Starting at 81.79 on Monday, peaked at 82.16 on Friday.
GUJCOT WEEKLY REPORT 10-JUN-2023
Market Movement from 05th Jun 2023 to 10th Jun 2023.
• With a decline of nearly 200 points in J