Cotton

New York cotton futures move higher
NEW YORK (July 25 2008): Cotton futures settled higher on Thursday on investor buying and short-covering as the market was given a boost by possible losses in the cotton crop in southern Texas from hurricane Dolly, brokers said. The key December cotton contract gained 0.94 cent to finished at 73.86 cents per lb, dealing from 70.78 to 73.70 cents.

"To get it extended, you need to get it over 75.30 (cents, basis December)," said Stevens. Stevens said the damage inflicted by hurricane Dolly on the 92,000 acres of cotton in the Rio Grande Valley may have given the market a boost as well.

The cotton from that area is important because it is the first cotton in the new crop 2008/09 marketing year (August/July) and some of that fibre may have already been contracted for sale, he added. The amount probably lost is small since Texas was forecast to plant 4.7 million acres to cotton in 2008/09. The state is the leading cotton grower in the country.

Market players took note of the US Agriculture Department's weekly export sales data. USDA said US cotton sales stood at 151,000 running bales (RBs, 500-lbs each) and US cotton shipments of previously booked orders hit 258,000 RBs.

Brokers Flanagan Trading Corp sees support in the December contract at 73.60 and 72.50 cents, with resistance at 74.40 and 75.25 cents. Volume traded Wednesday hit 13,921 lots, exchange data showed. Open interest in the cotton market fell 837 lots to 217,729 lots as of July 23, exchange data showed.

Liquid fertiliser to eradicate cotton pests prepared

MUZAFFARGARH (July 25 2008): Agri scientists in Holland have reportedly prepared a liquid fertiliser, which will eradicate whitefly and mealy-bug from the cotton crop, said EDO Agriculture Chaudhry Shehzad Sabir. He said samples of the liquid fertiliser had been imported and work was underway on lab studies and experiments, to study the impact of the product on Pakistan soil.

The EDO said if the claims regarding the product prove to be true, it would be a big breakthrough in agriculture and cotton cultivation. It is said not only to eradicate pests but also ensure rapid growth of the crop with maximum output. If found viable, the fertiliser would be supplied in district Muzaffargarh within a few months, he added.

Lint prices, spot rate fall on cotton market

KARACHI (July 26 2008): After hitting the season's peak, the prices came down modestly on the cotton market on Friday, dealers said. Resultantly, the Karachi Cotton Association (KCA) official spot rate fell by Rs 25 to Rs 3900, dealers said. In the ready business, phutti prices fell to Rs 1975-2050 in Punjab and in Sindh rates drifted lower at Rs 1950-1975. Cottonseed prices also fell at Rs 775, they added.

In the meantime, trading activity was strong as ginners lowered the asking prices on anticipation of fresh phutti arrivals, leading brokers said. Mills were active and trying to seal the deals at the present levels because rising prices of cotton in the international market were not allowing them space to wait for decline in the rates.

Cotton exporters finalised the deals with the Indian, Bangladeshi and Indonesian counterparts to sell nearly 35-40 thousand bales but to meet the local demand the cotton related people are opposing the export of same because it may cause further rise in imports from other countries, they said.

On Thursday, the NY cotton futures move up on investor buying and short-covering as the market was given a boost by possible losses in the cotton crop in southern Texas from hurricane Dolly, brokers said. The key December cotton contract gained 0.94 cent to finish at 73.86, dealing from 70.77 to 73.90 cent per lb. Fiber contracts booked losses in other markets on investment fund short-covering.

THE FOLLOWING DEALS WERE REPORTED: some 200 bales of cotton from Shadadpur sold at Rs 4150, 900 bales from Sanghar at Rs 4100-4150, 400 bales from Tando Adam at Rs 4100-4125, 500 bales from Hyderabad at Rs 4100-4175, 200 bales from Depalpur at Rs 4150, 200 bales from Haroonabad at Rs 4160, 400 bales from Bahawalnagar at Rs 4150, 200 bales from Gojra at Rs 4150, 800 bales from Sahiwal at Rs 4100-4150-4175, 800 bales from Chichawatni at Rs 4100-4150, 200 bales from Ghaziabad at Rs 4150, 400 bales from Hasilpur at Rs 4100-4170, 200 bales Bahawalpur at Rs 4100, 600 balses from Arifwala at Rs 4100-4150-4200 and 400 bales from Pakpattan at Rs 4100-4150, dealers said.

================================================== =========
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
================================================== =========
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
================================================== =========
37.32 Kgs 3900.00 50 3950.00
-----------------------------------------------------------
Equivalent
-----------------------------------------------------------
40 Kgs 4180.00 50 4230.00
================================================== =========

Cotton Prices Supported by Stronger Demand (Weekly Report)

23 July 2008 - Cotton prices resisted the fall in commodity markets in the last week, reflecting a rebound in demand from spinners after US futures fell 10% from a month ago. The Indian monsoon could be weaker than expected, in addition, with delays being reported in the planting progress. A lack of rain in India could reduce the next domestic crop, possibly leading to higher prices on the international market.

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Cotton Textile Crisis Announced by Latest Data
24 July 2008 - Rising production costs in Asia and slowing down clothing sales at US and EU stores may rapidly result in a global textile crisis. Latest data supplied by cotton analysts are indicating that cotton consumption will be lower than expected in the coming cotton season, starting in August. A decline in cotton use is even announced by two major forecasting bodies. In addition, cotton consumption would have already decreased in the currently expiring season, according to cotton specialist Paul Reinhart.

New York Close (vs. previous week)
Oct08 71.68 +133 May09 81.35 +97
Dec08 74.40 +116 Jly09 82.50 +87 4
Mch09 79.95 +131 Oct09 84.70 +77

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Cotlook A Index (FE)
2007/08 78.00 +0.75
2008/09 80.20 +0.90
U.S. Exports Net Sales
Accumulative 15,105,900
Weekly 55,100
Indonesia 18,100
Turkey 11,400
China 9,300
Weekly/Next MY 96,900
Wkly Shipments 258,600
CCC Loan Outstanding
4,996,586 -232,162
NYK Open Interest
218,764 -383
Net Speculators’ Position
Short -0.2% -3.2%
NYK Certificated Stocks
1,737,286 +22,204
Awaiting review 9,491

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NYK Futures – traded inside the range of 71.00-75.00 basis Dec08 on light
volume throughout the week, testing the lows of the range on Wednesday,
then rallying to the highs today. Oil continued its decline, pressuring the CRB
index to fall to a level not seen since early May. Support also came to the
market as concerns of the 2008/09 world crop continue. India only received
modest rains again this week and the U.S. dryland acreage is approaching
distress levels while India mills were the main buyers in the international cash
market. On the other hand, China’s import inquiries have diminished due to
tight cash flow, lack of good orders from their end-users, local merchants
needing to liquidate stocks and factories around Beijing closing temporarily
due to the Olympics.

U.S. Domestic Consumption - June 2008 seasonally adjusted annualized
rate of 4.422 million bales, roughly unchanged from the revised May figure of
4.430, was down from 4.511. The average of the 2007/08 season with one
month remaining is 4.6, the same as USDA’s estimate.

U.S. Crop – Hurricane Dolly made landfall about 35 miles north of Brownsville,
the border town between Texas and Mexico. Most of the Lower Rio Grande
crop had already been harvested, but torrential rains of over a foot fell in some
areas causing massive flooding in the region. Corpus Christi experienced up
to 5 inches in moisture and high winds, causing damage to the fields that had
already been defoliated. It is still early to estimate the quantity and quality effects. This storm continued
westward and will not provide any moisture to West Texas or Oklahoma. Deteriorating soil moisture
conditions from West Texas to the Southeast and the dry-land acres are the hardest hit. The crop
condition report as of Sunday, July 20, showed the crop holding at 45% good-to-excellent compared to
last week at 46%. Boll squaring at 80% and setting at 42%, continue to lag behind their five-year
averages of 85% and 44%, respectively.

Uzbekistan – The crop is generally developing well; in most areas, even better than the previous season.
In some regions there are problems with the irrigation of the crop due to insufficient water. An overall
production of 1,000,000 tons is expected. Turkmenistan – There are just minor quantities left unsold out
of the 2007/08 crop: about 2,000 tons of fiber cotton from the State Organization Turkmenpagta, which is
currently offered through the exchange and an additional 13,000 of the State Reserve, which might be
offered during the coming weeks. The weather in July remained very hot, with daily temperatures above
40 degrees Celsius. The forecast predicts very hot and dry weather. A general shortage of water in some
of the cotton growing areas remains a concern and could affect the crop size. Cotton picking will start by
the first half of August. A production of 290,000 tons fiber (including about 18,000 of ELS) is expected.

Tajikistan – the 2008/09 season production is expected to fall slightly below 100,000 tons fiber cotton
(including about 5,000 of ELS) due to the very cold, but also very dry winter in Tajikistan. The result was
that many cotton growing areas, mainly in the northern part of the country, did not receive sufficient
amounts of water for cultivating the fields. The shortage of fertilizers and/or quality fertilizers will also be
a serious issue this season, causing lower yields and affecting the quality of the crop. The reorganization
of the financing scheme for the famers, which allows them to receive funds for financing the crop directly
from local banks, has been problematic, causing delays for preparing the fields on time. Early picking is
expected to commence in some areas by mid August. The massive harvesting should start by the
beginning of September. It has been officially announced that the supply of electricity will be shortened
after September 9. This may lead to a longer ginning period and possibly a negative impact on the
quality of the cotton. Kazakhstan - Like in most of the other cotton growing areas in Central Asia,
insufficient water is the main reason for the reduced crop size because the farmers were forced to switch
to less irrigation intensive crops. The cultivated area has been reduced from 200,000 to 170,000
hectares, which will result in a final production of close to 100,000 tons. Kyrgyzstan – The production
area for cotton has been reduced each year, with just about 32,000 hectares planted for the 2008/09
season. The farmers do not have the financial resources to buy quality seeds and fertilizers. The
shortage of water is also an issue, which could have a negative impact on crop size.

Cotton production to decline sharply
26 Jul 2008 12:31 pm

Mumbai - Cotton production in India that has been on rise since last five years is expected to decline sharply during the next season as major cotton-producing states have received insufficient rainfall so far. According to traders, cotton production next season is expected to drop by 11 per cent to 14 per cent, or 35 lakh to 45 lakh bales.

The purchasing officer with a prominent mill in north India said cotton sowing has been low due to insufficient rains in many parts of the country. Even if rainfall remains normal henceforth, the yield of cotton will be below average and therefore the production is expected to be down at around 2.70 crore to 2.80 crore bales.

Although, not everyone is buying this theory. A senior official with the Cotton Corporation of India (CCI) said it would not be right to arrive at any conclusion at this stage. Sowing and production of cotton may improve if the comings couple of months witness good rainfall.

Cotton production record in India:-

Year Acreage in lakh hectares Production if crore bales Average yield in kgs per hectare
2000-2001 85.76 1.4 278
2001-2002 87.3 1.58 308
2002-2003 76.67 1.36 302
2003-2004 76.3 1.79 399
2004-2005 87.86 2.43 470
2005-2006 86.77 2.44 478
2006-2007 91.42 2.8 521
2007-2008 95.3 3.15 553

(Source: Cotton Corporation of India)

Remarkable decline in cotton sowing

As per the latest report of Crop Weather Watch Group, cotton has been sown in 58.08 lakh hectares till July 18 in the country. This area is 11.8 lakh hectares (16.9%) down from that in the corresponding period last year. Sowing has sharply reduced in Maharashtra, Andhra Pradesh, Karnataka, Rajasthan and other states. Moreover, the standing crop in these regions is getting damaged in want of sufficient rainfall.

Cotton sowing condition as of July 18:-

State Change in acreage (in lakh hectares) Change in acreage (in percentage)
Andhra Pradesh -2.8 -31.8%
Gujarat 4.1 32.7%
Haryana -0.7 -13.5%
Madhya Pradesh -1 -15.4%
Maharashtra -9.1 -34.7%
Punjab -0.4 -7.3%
Rajasthan -1.9 -50.8%
Overall India -11.8 -16.9%

(Source: Crop Weather Watch Group report)

Cotton acreage has already declined in northern India. Cotton acreage last year in the region was 14.92 lakh hectares, which has dropped 19% to around 12.12 lakh hectares this year. Acreage has reduced in the three states of northern region, including Punjab, Haryana and Rajasthan. The most affected among the three states is Rajasthan, where cotton sowing has dropped sharply by almost 50%. However, condition of crop is said to be good due to superior-quality seed and favourable weather there, and will check the fall in production to some extent.

Traders said, the average yield is likely to increase this year as the number of plants per acre is 7900 as against 6500 in the previous year. But the total production in the region is still likely to be limited to 42 lakh to 42.5 lakh bales as against 47 lakh bales of the previous year.

In the western parts, cotton production is expected to witness a sharp fall. Sowing has been very low in Maharashtra, especially in Marathwada and Vidarbha. As of July 18, cotton sowing in Maharashtra was down by 9.1 lakh hectares (34.7%).

In Gujarat, the largest cotton-producing State in India, sowing has improved smartly during the last week. In Madhya Pradesh, traders are claiming increase in cotton acreage, but government data indicates at low sowing this year.

In southern parts, Karnataka and Tamil Nadu are in good position but cotton sowing has declined sharply in Andhra Pradesh. The State's Adilabad region, where cotton is sown in 1.5 lakh hectares normally, has not witnessed sowing amid absence of rains. Sowing in other regions in the State is said to be satisfactory. In all, the acreage in Andhra Pradesh has dropped by 2.8 lakh hectares (31%) than that in the previous year.

Monsoon becomes active again

Monsoon has became active once again in Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh and Gujarat, where sowing is likely to improve and the standing crop would also be benefitted. But the delay in sowing will cut the average yield.

Raju Shah, a broker in Marathwada region, said that the average yield might decline by 20% to 30% due to delayed sowing and this will adversely affect the total production.

Rainfall condition in major cotton-producing states (From June 01 to July 23):-

Region Rainfall in MM Change in average rainfall Situation
Marathwada 103.6 -62 Very less
Central Maharashtra 159.1 -59 Less
Vidarbha 267.9 -35 Less
Gujarat region 247.2 -36 Less
Saurashtra 148.8 -35 Less
Western Rajasthan 107.3 5 Normal
Eastern Rajasthan 266.6 19 Normal
Punjab 286.9 61 More
Haryana 253 49 More
Western Madhya Pradesh 301.1 -8 Normal
Telangana 211.9 -30 Less
North-internal Karnataka 88.4 -53 Less
Tamil Nadu 99.7 7 Normal

(Source: India Meteorological Department)

Prices may surge; exports may be banned

Cotton prices are at their record level in the domestic market looking at limited stocks and on expectations of lower production across the globe. India is facing a shortage of cotton following heavy exports from the country, and millers are now compelled to import cotton from other nations. But foreign countries are also short of stocks.

Traders said that due to lower production, the benchmark cotton variety S-6 may open between Rs 28,000-Rs 30,000/candy during the next season.

Experts say that the government would be discouraging exports to ensure sufficient supplies to domestic millers. For this, the government may consider stringent steps like limiting or completely banning cotton exports, and imposing export duty. The government may not like to repeat the situation like the current year, when over one crore bales of cotton were exported and the country has now been compelled to import from other nations.

Cotton lint stronger in west India
26 Jul 2008 2:59 pm

Mumbai - Cotton lint was quoted steady-to-higher at the spot market across western India Thursday despite the most-awaited rainfall in many parts of Maharashtra, Madhya Pradesh and Gujarat. Sentiment for cotton is bullish after the overnight gains in the international markets. Besides, prices are gaining on reports that sowing of cotton till July 25 has been lower compared to last year.

The Met Department has predicted rainfall central, western and southern India in the next five days. Sowing of cotton in these regions has not completed yet and the rains may help resume the process.

At Kadi market in Gujarat, cotton lint S-6 A-grade was quoted at Rs 28,000-Rs 28,500/candy while average-grade traded at Rs 27,600-Rs 28,000/candy.

In Maharashtra, the 28MM cotton lint traded at Rs 28,000-Rs 28,500/candy; 29MM cotton lint traded at Rs 28,600-Rs 28,900/candy; while 30+MM cotton lint traded at Rs 29,000-Rs 29,300/candy; and 31+MM cotton lint traded at Rs 29,400-Rs 29,800/candy.

At Sendhwa market in Madhya Pradesh, the 28MM cotton lint traded at Rs 28,000-Rs 28,400/candy; 29/30MM cotton lint traded at Rs 28,500-Rs 29,900/candy; and 31MM cotton lint at Rs 29,100-Rs 29,500/candy; and DCH variety traded at RS 32,000-Rs 34,000/candy.

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Cotton lint trades firm in north India
26Jul 2008 2:53 pm

Abohar - Cotton lint traded steady-to-higher at major markets across north India Saturday. Sowing of cotton has fastened up following rainfall in many parts of the country, but prices have not affected by it so far.

Sentiment for cotton is bullish after the overnight gains in the international markets. Besides, prices are gaining on reports that sowing of cotton till July 25 has been lower compared to last year.

In Punjab, cotton lint traded at Rs 2,900-Rs 2,905/maund at Budhaldha, Taapa and Rampura; Rs 2,880/-Rs 2,885maund at Malot and Bathinda; Rs 2,870-Rs 2,875/maund at Abohar; and Rs 2,855-Rs 2,860/maund at Manasa.

Cotton lint traded at Rs 2,805-Rs 2,850/maund in Haryana and at Rs 2,750-Rs 2,815/maund in Rajasthan.

Prices stabilise in slow trading on cotton market

KARACHI (July 27 2008): Prices maintained firm outlook on the cotton market on Saturday amid modest trading following the news of phutti arrival by the next month, dealers said. In the ready business, phutti prices were mostly same at Rs 1975-2025 in Punjab and in Sindh rates were unchanged at Rs 1950-1975, dealers said. Some 200 bales from Shahdadpur sold at Rs 4000, they said.

According to the market sources, the exporters have finalised the deals of nearly 40,000 bales of cotton till now, the major part was imported by India. But there are speculations in the air that the government may impose export duty to discourage the export, they said.

In the meantime, they said that the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and All Pakistan Textile Mills Association (APTMA) are opposing the export but on the other hand, ginners and exporters were in favour of same due to better return, they said.

The chief executive of a leading cotton merchant said cotton prices may rally to its highest level in 14 years in the 2009/10 season because the world will harvest more food crops. Besides, influential industry analyst Cotlook also said that poor growing, weather will reduce output in major grower countries, the US, China and India, but this would not be offset by slowing demand due to global economic turmoil.

In a report, Cotlook said mills around the world were "struggling to absorb manufacturing costs in an unhelpful macro economic climate." On Friday, the NY cotton futures finished near a month high on follow-through investment fund buying and brokers said the strong tone to fibre contracts would spill over into next week.

The key December cotton contract settled up 0.64 cent at 74.50 cents per lb after dealing from 73.45 to 74.80 cents. Based on the second position charts, it was the highest close for cotton in about a month. Volume traded in the December contract stood at 7,950 lots at 2:37 pm EDT (1837 GMT).

THE FOLLOWING DEALS WERE REPORTED: some 400 bales of cotton from Shahdadpur sold at Rs 4100, 200 bales from Main Channu at Rs 4125, 600 bales from Burewala at Rs 4100-4150, 400 bales from Haroonabad at Rs 4050, 800 bales from Pakpattan at Rs 4000, 145 bales from Gajjo at Rs 4100, 200 bales from Gojra at Rs 4150 and 1000 bales from Bhawalnagar at Rs 4100-4125, dealers said.

================================================== =========
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
================================================== =========
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
================================================== =========
37.32 Kgs 3,900.00 50 3,950.00
Equivalent-------------------------------------------------
40 Kgs 4,180.00 50 4,230.00
================================================== =========

Harvesting of food crop may push cotton to touch 14-year high

NEW YORK (July 27 2008): Cotton prices may rally to its highest level in 14 years in the 2009/10 season because the world will harvest more food crops, the chief executive of a leading cotton merchant said on Friday.

"The world is going to plant food before it plants cotton," Joe Nicosia, the CEO of merchant Allenberg Cotton Co, which is part of the Louis Dreyfus Group, said at an agricultural market network radio broadcast here.

He said most major cotton growing countries like the US, China and India among others are sowing more grains and oilseeds while struggling with the high price of crude-oil based fertilisers and transport. With cotton acreage shrinking and stocks being drawn down, Nicosia said cotton prices could see a "substantial rally of 30 to 40 cents" to 95 cents to $1.15 a lb in the 2009/10 marketing year (August/July), a high last seen in the mid-1990s.

The December 2009 cotton contract closed on Thursday at 85.97 cents a lb. It's contract peak was at $1.015 hit in early March. The Allenberg official said cotton prices will likely struggle over the next four months but should begin taking off in the first quarter of 2009 and "take another shot at 90 cents" in the spring.

Another potentially bullish factor is that cotton stocks are being depleted as world production shrivels due to farmers opting to sow more higher priced grains. In the US Agriculture Department's monthly supply/demand report, world stocks at the start of the 2008/09 marketing year stood at 61.26 million bales, but ending stocks for that season are at 53.24 million bales.

The gap between world production and consumption has increased, with the USDA now estimating a cotton deficit of 10.97 million bales in July from 10.73 million in June.

With weather problems plaguing production in the top three producers the US, China and India, the gap may well widen. Nicosia said the bullish argument for cotton was undermined over the past few years because of undercounting of production and import demand in places like China, the world's top consumer of cotton.

One time, a forecast of 20 million bales in Chinese imports fell to 11 million bales because production was higher than initially thought and the amount of purchases was too optimistic. This would then bloat world cotton stocks and depress prices as a result. Nicosia said calculating production and imports in China has improved and the chances of sizeable gaps impacting the market are being reduced.

COTLOOK PREDICTS POOR WEATHER MAY CUT COTTON PRODUCTION In the meantime, influential industry analyst Cotlook said on Friday that poor growing weather will reduce output in major growers the US, China and India, but this would not be offset by slowing demand due to global economic turmoil. In a report, Cotlook said mills around the world were "struggling to absorb manufacturing costs in an unhelpful macro economic climate."

It added, "Nonetheless, the reduction to our global (demand) estimate during the past month of 261,000 tonnes barely offsets the huge decrease in our production number of 818,000 tonnes. As a consequence,we are now predicting a much larger drawdown in world stocks in the forthcoming marketing year of 1.954 million tonnes."

Cotlook lowered its estimate of Chinese production by 150,000 tonnes because excessive rain took a toll on yield prospects in the world's top consumer of fiber. Irregular monsoon rains hindered planting in India while heat and blowing winds in West Texas led to the abandonment of nonirrigated crops.

Texas is the biggest cotton growing area in the United States, with 4.7 million of the 9.2 million acres planted to cotton in the US in 2008. Cotlook cut Chinese cotton consumption by 100,000 tonnes to 10.9 million tonnes.

Cotton prices shoot up on short supply

Guntur July 24, 2008, 0:45 IST

Supply shortage in both domestic and global markets has led to a steep hike in cotton prices, with farmers in Andhra Pradesh receiving Rs 3,700 a quintal compared with Rs 2,400-2,500 last month.


Farmers have completed sowing in 70 per cent of the 900,000 hectares they sowed in last year, according to P Santosh Kumar, a cotton trader. Around 55 per cent of it has already germinated, he adds.

If rains arrive in a week or another 10 days, cotton hectarage would touch 1.1 million. But if rains are delayed, a part of the crop may die. If that happens, the farmers would go for re-sowing, he said.

Farmers, traders, exporters and millers hope for a phenomenal increase in cotton prices when the fresh crop hits the market in October as shortage is expected to continue.

At one point, lint (cotton without seeds) was priced at Rs 30,000 a candy at Guntur. This week, the price is around Rs 28,000. Cotton kapas are now available at Rs 3,000-3,400 a quintal. Crop scarcity has forced exporters to release their stored cotton to the domestic market.

Around 25 per cent of the summer cotton crop (audri or ac cotton), raised in Nellore and Prakasam districts, is expected to reach the market soon.