MUMBAI (Commoditiescontrol) - Cotton prices currently are hovering at around season high, with S6 A-grade cotton in Gujarat today quoting at Rs. 34,300-34,500/candy. On October 1, 2014, when the current season began, spot rates of A-grade was Rs. 34,500-34,700/candy, suggesting that the prices have almost touched the level at which the season started.
MCX Spot Cotton Rates From 1 April 2014-10 April 2015
COTTON SPOT RATES THIS WEEK
Daily spot prices
Date
|
Guj - S6
|
MH - MP A-Grade
|
J34 - Punjab
|
AP - Warangal
|
April 4, 15
|
33000
|
34000
|
34300
|
33200
|
April 6, 15
|
33500
|
34600
|
34600
|
33200
|
April 7, 15
|
34000
|
34700
|
35300
|
34000
|
April 8, 15
|
34500
|
35000
|
35400
|
34500
|
April 9, 15
|
34400
|
35000
|
35300
|
34500
|
April 10, 15
|
34200
|
34700
|
35100
|
35000
|
April 11, 15
|
34200
|
34500
|
34900
|
35000
|
Trend in cotton prices in the week ending April 11, 2015 was more or less positive, quoting 2-3 per cent up or Rs. 500-1,500/candy higher than the previous week. In the initial days of the week, prices moved on the upside due to renewed boost from the continued rally.
The major factor that pulled price higher was Cotton Corporation of India’s (CCI) increased floor prices at its E-auction. Tight availability of cotton, especially A-grade in physical markets pushed buyers to source cotton from CCI. Most of the mills and spinners have stock for the next 2-3 weeks only. So they now have to buy cotton at higher rates to meet their requirements. In central India and Rajasthan, the state-run agency has sold cotton at Rs. 200-400/candy higher than the floor price it had fixed.CCI has so far procured around 86 lakh bales and sold around 4 lakh bales.
Cotton prices in international markets are moving on the upside, that is helping exports to have a firm hold in overseas markets. Indian cotton is still competitive in overseas markets, attracting export demand at 66 cents.
The U.S. Department of Agriculture (USDA) released its Global Agriculture Information Network (GAIN) report, that showed lower cotton planting intentions by farmers all over the world. The report played an important role in influencing buyers’ sentiment in cotton.
Yarn prices also gained Rs. 2-5/kg during this week on improved demand. In Feb 2015, India’s cotton yarn production was up 5.2 percent to 338.04 million kilogram (kg) against 321.31 million kg previous year. However, it was 3.9 percent down to 351.80 million kg a month ago.
Prices gave up initial gains later in the week and bent lower as lot of traders entered markets to liquidated their stocks. The recent surge in prices seemed matching their psychological level.
Cotton complex prices were constantly on the upside till Wednesday, but then slight decline in prices was prevalent then on and recorded losses in most of the remaining sessions this week. Though oil mills are facing crushing disparity due to lower oil prices.
On Thursday, the USDA has released its monthly supply-demand report for April where in it forecasts for U.S. inventory for 2014-15 to 4.4 million 480 pound bales, up from 4.2 million bales in its March forecast.
The Cotton Corporation Of India (CCI) did not receive an encouraging response at Friday E-auction. It sold only 14,000 bales from 49,900 bales, suggesting that the market sentiment may retreat from the bullish trend, pointing towards a possible correction in prices in the coming sessions.
The week witnessed total arrivals of around 3.25 lakh bales. Total arrival this cotton season beginning Oct 2014 is at around 3.14 crore bales as on 11 April 2015.
USDA Monthly Supply Demand Report
The USDA has estimated India’s cotton production for 2014-15 at 30 million bales compared to 30.5 million bales estimated last month. It has kept imports unchanged at 1.1 million bales and projected exports lower at 3.9 million bales compared to 4.2 million bales. Mills consumption has been projected up to 24.2 million bales and ending stock has been revised down to 14.52 million bales.
USDA April Month WASDE Report: 2014-15 Trade Changes
MAJOR EXPORTERS:
--India has lowered 300,000 bales to 3.9 million on weak demand in china and higher internal prices supported by domestic policy.
--Australia exports likely to decline by 200,000 bales to 2.8 million on tight end of season exportable supplies.
--Greece raised 150,000 bales to 1.05 million on strong demand, especially from turkey.
--Brazil raised 100,000 bales to 3.85 million on strong demand for machine picked cotton.
--Mali has cut 100,000 bales to 700,000 on slower recent activity.
MAJOR IMPORTERS:
--China raised 200,000 bales to 7.5 million on strong demand for high grades of cotton.
--Vietnam increased 150,000 bales to 4.1 million on strong yarn export demand.
--Brazil lowered 100,000 bales to 50,000 on slower domestic demand.
USDA 2015-16 Attache Cotton Supply-Demand Estimate
Pakistan
- Production at 10 million bales (480 lb) Vs 10.5 million bales in 2014-15
- Consumption at 11.3 million bales, up 7 per cent from 2014-15
- Area unchanged at 2.95 million hectares
- Imports at 2 million bales
- Exports at 500,000 bales compared to 600,000 bales in 2014-15
Egypt
- Production at 315,000 bales, up from 525,000 bales in 2014-15
- Area at 93,000 hectares compared to 155,000 in the current season
- Consumption at 650,000 bales
- Imports 30 per cent up to 450,000 bales
Stock Position At Exchange Warehouses
Cotton stocks at National Commodity and Derivative Exchange (NCDEX) accredited warehouses as on April 10 stood at 2,200 bales, while cotton oil cake (CoC) was at 37,588. At Multi Commodity Exchange (MCX) accredited warehouses, cotton stock was at 1,13,200 as on April 9.
NCDEX, MCX Weekly Update
MCX COTTON UPDATES
|
Date
|
Expiry Month
|
Open(Rs)
|
High(Rs)
|
Low(Rs)
|
Close(Rs)
|
PCP(Rs)
|
Volume(In Lots)
|
OI(In Lots)
|
6-Apr-15
|
30-Apr-15
|
15670
|
16060
|
15670
|
16040
|
15520
|
3910
|
8272
|
7-Apr-15
|
30-Apr-15
|
16030
|
16150
|
15880
|
16120
|
16040
|
2810
|
8331
|
8-Apr-15
|
30-Apr-15
|
16110
|
16220
|
15980
|
16100
|
16120
|
2764
|
7929
|
9-Apr-15
|
30-Apr-15
|
16100
|
16130
|
15940
|
15990
|
16100
|
1542
|
7905
|
NCDEX COTTON OIL CAKE UPDATES (Expiry Month: APRIL 2015)
|
Date
|
Prev Close Price
|
Open Price
|
High Price
|
Low Price
|
Close Price
|
Volume
|
Open Intrest
|
Trade Value
|
6-Apr-15
|
1689
|
1702
|
1756
|
1702
|
1756
|
40740
|
60590
|
7102.9
|
7-Apr-15
|
1756
|
1761
|
1776
|
1720
|
1735
|
40680
|
48560
|
7085.26
|
8-Apr-15
|
1735
|
1731
|
1739
|
1711
|
1728
|
27470
|
34700
|
4745.91
|
9-Apr-15
|
1728
|
1725
|
1740
|
1718
|
1725
|
14920
|
28820
|
2580.39
|
10-Apr-15
|
1725
|
1721
|
1739
|
1715
|
1735
|
21300
|
14770
|
3675.82
|
NCDEX KAPAS UPDATES (Expiry Month: APRIL 2015)
|
Date
|
Prev Close Price
|
Open Price
|
High Price
|
Low Price
|
Close Price
|
Volume
|
Open Intrest
|
Trade Value
|
6-Apr-15
|
803.5
|
809
|
835.5
|
809
|
835.5
|
5413
|
4294
|
9009.21
|
7-Apr-15
|
835.5
|
844
|
856
|
822.5
|
838.5
|
6952
|
3795
|
11624.19
|
8-Apr-15
|
838.5
|
841
|
842
|
826.5
|
837
|
4106
|
3700
|
6848.84
|
9-Apr-15
|
837
|
837
|
839
|
826.5
|
831
|
2563
|
3555
|
4270.04
|
10-Apr-15
|
831
|
831
|
834
|
822
|
825
|
2828
|
3767
|
4678.75
|
Top Stories Of The Week
The Cotton Corporation of India (CCI) is set to float global sale tender plans to export some of the surplus amid record procurement and domestic industry’s complaint of having cornered supplies. CCI chairman B.K. Mishra informed that the agency has spoken to many buyers in Bangladesh who are keen on buying Indian cotton. Initially, to test the market, tenders will be for 5,000-10,000 bales (170kg each) by this month-end. If it goes through, it could float another, with an overall target to sell 30,000 bales this cotton year (October 2014–September 2015). It has procured 9.1 million bales this year so far at MSP, surpassing the previous record of 8.9 million in 2008-09. Almost the entire procurement operation for this year is done.
India’s commerce Ministry has expressed concerned that India’s trade deficit with China could double to $60 billion by 2016-17. To stop this to happen, the two trade partners need to address market access constraints and non-tariff barriers faced by Indian goods in China, according to the ministry. As per data available, India’s exports to China during April 2014- January 2015 fell 18.6 per cent.
State government of Andhra Pradesh has announced a number of subsidies for spinning mills, cotton ginning mills, and garment and apparel units. For spinning mills, government has provided 12.5 per cent interest subsidy, Rs. 1 per unit power subsidy, refund of value added tax (VAT) on purchase of intermediate products, reimbursement of tax up to 100 per cent on eligible fixed capital investment in plant and machinery for 5 years. Similarly for cotton ginning mills, Rs. 1/50 power subsidy has been announced. For garment and apparel units, government has announced capital subsidy on investments up to Rs. 10 crores and financial assistance up to 50 per cent of expenditure on common facilities in textile and apparel parks.
Prime Minister Narendra Modi on Wednesday launched Micro Units Development Refinance Agency (MUDRA) Bank which will provide credit of up to Rs 10 lakh to small entrepreneurs and act as a regulator for 'Micro-Finance Institutions' (MFIs). Also, Mr. Modi asked banks to restructure farm loans of rains affected farmers in the country. The PM has instructed insurance companies to pro-actively settle their claims. Further relieving the country’s farmers, the government has reduced criteria of crop damage for providing compensation to affected farmers to 33 per cent from 50 per cent.
In yet another news, the Southern India Mills' Association (SIMA) has urged government to ask CCI to sell cotton directly to actual through E-auction. SIMA has advised CCI not to sell at rates higher than the market rates.
China has set its target price for cotton in 2015 in Xinjiang, the leading producing region, at 19,100 yuan ($3,080) per tonne, down from last year’s 19,800 yuan. The region has a huge inventory in warehouses and aims to reduce it before the country starts imports again.
U.S. Market Through The Week
Cotton futures trade on Intercontinental Exchange (ICE) opened the week low at 63.75 cents and continued to trade on the upside for the next three days and touched level of 67.19 cents. However, after the weekly export sales and WASDE report released by the USDA, movement in the fibre slowed down and closed Friday’s session at 65.06 cents. Open interest for May contract has been on a declining spree throughout this week with Monday at 85,022 and reduced as low as 70,573. As per the CFTC report, ICE cotton speculators raised net long position by 7,026 contracts to 28,126 contracts in week ending April 7.
Cotton Market Outlook For Next Week
Cotton prices during the next week may remain on the upside given the competitiveness of Indian cotton in the international markets, which could further boost exports. Also, strong demand from local mills can provide enough support to prices to gain further given the fact that pipeline is empty and supply is extremely limited.
(By Commoditiescontrol Bureau; +91-22-61391533)