LAHORE: The local market on Tuesday remained steady and the trading volume remained low. Cotton Analyst Naseem Usman told that rate of cotton in Punjab and Sindh is in between Rs 21,000 to Rs 21,500 per maund.
Textile sector globally is eagerly waiting for sign of easing in cotton prices, but they are not likely to take a big dip in the near future, as that 51 per cent US cotton crop is under risk of dryness and draught, according to the US department of Agriculture (USDA). Cotlook A Index is also not indicating an ease at least till August 2022.
According to latest report of USDA, cotton production in the US may reduce in the coming season 2022-23 (August-July) to 35.92 lakh MT from 38.15 lakh MT of 2021-22. The production was 31.81 lakh MT in 2020-21. Since ICE cotton takes strong cues from the US production scenario, it may not ease in the near future.
As per the USDA report, cotton production may increase in India, China, Brazil and Pakistan in 2022-23 season. Global production is projected to increase to 264.03 lakh MT in next season from 254.61 lakh MT of 2021-22.
According to Fibre2Fashion’s market insight tool TexPro, Cotlook A- Index (USASMP) will remain as high as $1.552 per pound in August 2022 when new season will begin for US cotton. It will increase slightly from the projected level of $1.551 per pound of July 2022. Cotlook index peaked at $1.635 per pound in May 2022 but the average price is projected at $1.564 per pound for June 2022.
USDA has released its June 2022 World Agricultural Supply and Demand Estimates (WASDE) report. Here’s this month’s summary for cotton:
The 2022/23 U.S. cotton supply and demand projections are unchanged from last month, with the exception of a 5-cent increase in the season-average upland farm price to 95 cents per pound. A sharply higher percentage of U.S. upland area has been forward contracted for 2022/23 as of May 31, and futures prices for the post-harvest months remain strong. There are no changes to the 2021/22 U.S. balance sheet, and the projected farm price remains 92 cents.
The 2022/23 world cotton balance sheet includes slightly higher production and slightly lower consumption projections compared with the previous month, and ending stocks are virtually unchanged. Production is 200,000 bales higher due to a 100,000-bale increase for Egypt along with smaller changes for West African producers. Global consumption is 450,000 bales lower, with the largest declines in Mexico, Bangladesh, and Vietnam.
Beginning stocks for 2022/23 are also lower this month as a 1.5-million-bale decline in 2021/22 global production more than offsets a 1.25-million-bale decline in projected consumption. A 1.0-million-bale drop in India’s crop accounts for most of the production change, with lower yield expectations in Brazil accounting for the remainder.
Consumption is projected 500,000 bales lower in both China and India, with smaller declines for Mexico and Vietnam.
The Spot Rate remained unchanged at Rs 21000 per maund. The Polyester Fiber was available at Rs 310 per kg.
Copyright Business Recorder, 2022
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