LAHORE: Small business was witnessed in the local cotton market on Tuesday in process of trading activity.
Cotton Analyst Naseem Usman told Business Recorder that Spot Rate remained unchanged. He also told that rate of cotton in Punjab and Sindh is in between Rs 18000 to Rs 20,000 per maund.
400 bales of Panu Aqil were sold at Rs 20,500 per maund and 400 bales of Khan Pur were sold at Rs 20,500 per maund.
Cotton Analyst Naseem Usman told that ICE cotton futures jumped more than 3% on Monday to their highest level since July 2011 on supply concerns and demand prospects, supported by high oil prices that make substitute polyester more expensive.
The first month contract on ICE futures for May was up 3.55 cents, or 2.8%, at 130.41 cents per lb, by 11:57 a.m. ET, after hitting its highest since July 2011 at 131.71 cents per lb.
“The big power today is large fund and speculative money pouring into cotton,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
“Demand for U.S. cotton has been good since mid July. The sales have been really good and I expect that to continue. Also, mills are slowly covering their position, but there’s still more buying that has to be done.” Last week, a federal weekly report showed net export sales of 371,400 running bales of cotton for 2021/2022, up 5% from the previous week and 34% from the prior 4-week average. Increased sales were primarily to China.
“In Brazil the crop’s in good shape but not available yet and we think Indian crop is smaller than anticipated, not a lot of exportable surplus there. So there is lack of available cotton and that’s pushing prices higher,” said Jordan Lea, senior trader at DECA Global.
Oil prices jumped by more than $6 on Monday as European Union nations considers Russian oil ban. Sentiment in grains markets also remained upbeat as Chicago wheat futures rose more than 3%, while hopes for U.S. export demand supported soybeans.
Meanwhile, speculators decreased net long positions in cotton futures by 6,309 contracts to 59,333 in the week to March 15, data showed on Friday.
Total futures market volume fell by 8,896 to 29,507 lots. Data showed total open interest gained 3,043 to 225,227 contracts in the previous session.
Cotton prices rose to their highest level in more than a decade on Monday, due to a prolonged drought in parts of the central United States.
The plant fiber reached $1.3171 per pound (about 453 grams) on the key US futures contract, the highest since July 2011.
Rainfall has been exceptionally low since early January in the northwest part of Texas – which produces about 40 percent of all US cotton production.
Depending on the region in the United States, cotton is planted from March to June, so there is uncertainty in the market about size of this year’s crop, according to John Robinson, a professor at Texas A&M University and cotton specialist.
Many are already comparing the current weather conditions to 2011, when US cotton producers experienced their worst drought ever and prices rose as high as $2.27 per pound.
The drought this time is hitting an already tight market because of a pandemic-related increase in demand for cotton textiles as people spend more time at home.
In addition, there has been a demand increase in China, by far the world’s largest producer and importer.
Another contributing factor is the soaring price of pesticides, which are widely used on cotton farms and are derived from petroleum.
While high cotton prices were expected to lead to a sharp increase in US acreage, the cost of pesticides is expected to limit that growth, Arlan Suderman of broker StoneX told the local PBS station in Iowa. Added to that is a wave of speculative buying, driven by accelerating prices, Robinson said.
The Spot Rate remained unchanged at Rs 20,000 per maund. Polyester Fiber was available at Rs 285 per kg.
Copyright Business Recorder, 2022
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