MUMBAI (Commoditiescontrol) - Cotton prices in domestic markets displayed persistent upward trend throughout the week ending 22nd August, 2015. During the week, prices in north Indian markets posted gains of Rs 70-80/maund (37.3kgs each). In central Indian physical markets, cotton strengthened Rs 600-800/candy (356kgs each). Likewise, movement on cotton market in south India was also more or less positive.
Even as movement in yarn market is continuously depressing, cotton market seems to have received fresh encouraging fundamentals lately amid limited unsold cotton stocks, lower global crop forecast, lower global ending stocks among others. In the last 15 days, cotton market has witnessed an uptrend of Rs 1,500 movement compared to negative movement of Rs 4-7/kg in yarn market.
FACTORS LIFTING RATES UP
Small Unsold Stocks
First of all, private traders and stockists all over the country have an unsold cotton stock of around 5-6 lakh bales, while Cotton Corporation of India (CCI) is left with around 34 lakh bales. Demand for CCI cotton in increasing with each passing day as ginning mills are sitting with scanty stocks of cotton. By the time the new season starts, the agency will most probably sell all of its stock. The government agency is regularly releasing atleast 1 lakh bales for domestic textile mills. During the week, the agency liquidated 6,42,000 bales out of 9, 39,300 offered, even after raising floor prices by Rs 600/candy in various centres. All India cotton arrivals as on 21 August, 2015 is estimated at around 359 lakh compared to 405 lakh bales in the corresponding period last year.
Lower Crop Forecast
The U.S. Department of Agriculture (USDA) last week released its supply-demand estimate for 2015-16 crop. The department slashed 2015-16 global cotton output forecast at 108.99 million bales (480 lb each) against previous estimate of 111.46 million bales. World ending stocks for the year is projected down at 105.19 million bales. But, world 2015-16 consumption of the fibre is raised to 114.65 million bales compared to 114.44 million bales.
That apart, the central government has released its fourth estimate on 2014-15 crop according to which total production of cotton for the season is estimated at 35.48 million bales (170kgs each), which is marginally lower than last year. Unseasonal rains/hailstorm during Feb-March 2015 had significant impact on production of rabi crops. As a result of setback in kharif as well as rabi seasons, the production of most of the crops in the country has declined during 2014-15.
Pest Attacks On Crop Intensify
Cotton crop in many major belts across the country have come under serious threat of pest attack, whitefly being the most common of all. In Punjab, humid and cloudy weather intensified whiteflies attack on cotton crop at some places. Whiteflies infestation is reported to have increased in Malwa region of the state which includes Bathinda, Mansa, Muktsar, Fazilka and Abohar.
Besides, cotton crop in Andhra Pradesh and Telangana has also been attacked by whitefly. Of the two, cotton is grown more in Telangana. Crops in Nalgonda, Adilabad and Nizamabad have been subjected to pest attack, although in low intensity, as per the state agriculture department. If whitefly attack intensifies, it ultimately leads to reduction in yield.
Deficient Rainfall In Central India
Central India has been receiving deficient rainfall from the last many days compared to other parts of the country. Poor monsoon rains in Maharashtra are likely to impact cotton in Marathwada Vidarbha region this year. Monsoon rains have given a miss to the area by being deficient during most of July and now in August also. If not revived lately, crop in the state will have to face sever damage.
Shrinking Sowing Figures
All India cotton sowing area reached 110.22 lakh hectares (ha) as on 21st August, 2015 compared to 118.8 lakh ha same period last year, according to central government.
Below is the state-wise cotton sowing data as on 21st August, 2015:
Currency Movement Lends Support
Throughout the week, movement in U.S dollar also lent support to overall business in domestic cotton markets. Indian cotton became competitive in overseas markets, resulting in slight surge in exports this week. Indian Rupee has been reeling under pressure since China devalued its currency Yuan last week. On 11th August, the People’s Bank of China devalued the Yuan to its lowest point in almost three years after a poor economic data. The country had devalued its currency in order to support its exports sector. After this move by the world top economy, Rupee breached the level of 65 against the U.S dollar, which came as another positive signal for Indian cotton market. Today, Rupee opened weak at 65.95/dollar.
At the current level, there are expectations of a spurt in export enquiry especially from Bangladesh.
WEEKLY WEATHER ROUNDUP:
During 13-19 August, 2015, the southwest monsoon was least over central parts of India, where it was 21 percent deficient. Country’s central regions received total of 56.4mm rainfall against normal rainfall of 71.1mm, as per Indian Meteorological Department (IMD).
During the week, southwest monsoon over most of the country was 10 percent below normal rainfall. East and northeast India received rainfall of 101.7mm against normal rainfall of 82.4mm, showing a deficit of 23 percent. South Peninsula recorded 36.1mm rainfall against normal rainfall of 42.4mm, a deficit of 15 percent.
For the country as a whole, cumulative rainfall during this year’s monsoon upto 19th August has been 09 percent below the Long Period Average (LPA). Rainfall activity was near normal in all the broad homogeneous regions of India except south Peninsula.
Forecast For Next Week:
Above normal rainfall activity is likely over northeast and adjoining east India on many days till beginning of September. Normal rainfall activity likely over South Peninsular during 20-24 August and 4-8 September. Below normal rainfall activity likely over plains of northwest and central India on many days.
.jpg)
CoC Price Settlement On National Commodity And Derivatives Exchange (NCDEX) As On 20th August
Cottonseed Oil Cake (CoC) final settlement prices of NCDEX contracts which expired 20th August, 2015 stood at Rs 1978.25/100kg.
Weekly Technical Update
MCX Cotton Bales Weekly (Price are in INR (Rs)/Bales)
Expect higher range of 886-914 to be tested. Weakness is below 856. Traders short can maintain the stop loss at 884. Sell is below 856 with high of the week as the stop loss. Momentary bias is to test higher range but sustainability can be key henceforth.
(Click Here For Full Story)
NCDEX Kapas April’16 Weekly: (Price are in INR (Rs)/20 Kg)
Traders short and holding the same can keep the stop loss at 852. Better opening and initial rise to 837-846 can be used to exit long and sell with a stop loss of 852. The last swing bottom of 801 to be tested with intermediate swing higher bottom of 826 can offer momentary support. Expect lower range of 821-797.
(Click Here For Full Story)
NCDEX COC September :( Price in Rs/Quintal)
Traders long can keep the stop loss at 1920. Buy above 2031 with low of the week as the stop loss or 1983 whichever is lower at the point of breakout.
(Click Here For Full Story)
SPECIAL COVERAGE THROUGH THE WEEK
US Cotton Crop Condition Seen 55% Good/Excellent - USDA
The U.S. Department of Agriculture (USDA) in its weekly crop progress report for the week ending 16th August, 2015 stated that U.S. cotton crop condition stood 55 percent good/excellent, one percent below previous week. According to the USDA report, 10 percent of U.S. cotton crop reached bolls opening stage in all the 15 major cotton growing states during the week compared to 11 percent a year ago period, and below five year average of 12 percent. Cotton setting bolls totaled 73 percent, behind the five year average of 88 percent. (Click Here For Full Report)
Whitefly Attack On Cotton Crop Intensifies In Punjab
Constant rains in Punjab may have benefited paddy crops, but humid and cloudy weather intensified whiteflies attack on cotton crop at some places in the state. Whiteflies infestation is reported to have increased in Malwa region of the state which includes Bathinda, Mansa, Muktsar, Fazilka and Abohar (Click Here For Full Report)
China’s July Cotton Imports Fall 62% On Year
Cotton imports by China in July fell 62.3 percent to 105,700 tons from a year ago period, as per customs data. The fall in imports by the wold’s top cotton consumer is largely attributed to the government’s decision to limit the country’s import quotas in an effort to boost demand for domestic fibre. China’s imports are already down down by 33 percent this year to less than 1 million tons. (Click Here For Full Report)
Vietnam Devalues Dong For 3rd Time This Year To Support Exports
Vietnam, current leading importer of Indian cotton, on Wednesday devalued its currency - Dong - for the third time this year to heal its export sector. The country’s exports sector is reeling under fresh problems after China surprisingly devalued the Yuan. China is Vietnam’s leading trading partner, therefore it was bound to leave a huge impact on the later’s trade balance sheet. (Click Here For Full Report)
Cotton Prices Remain Firm In Brazil; Half Of Planted Area Reach Harvest Stage
Cotton prices in Brazil are continuously increasing even as harvesting reaches more than half of the planted area, while trades are seen slow. Producers are delivering cotton from contracts and readjusting prices or holding cotton for future sales, making availability tight on spot markets. Some purchasers are cautious about asking prices. Thus, only some trades of small volumes have been registered for prompt delivery. (Click Here For Full Report)
China’s 2015-16 Cotton Output Seen At 5.5 Million Tons
China’s 2015-16 cotton output is pegged at 5.5 million tons compared to 5.86 million tons estimated earlier, as per China Cotton Association (CCA). In the 2014-15, the country produced 6.5 million tons of cotton. Most of the decline in output will come from the lower planted areas across China, which is estimated to fall by 24 percent, it said, following a monthly survey of farmers. Heat in recent weeks in China's top growing region, Xinjiang, had evoked concerns about a potential crop damage.
(Click Here For Full Report)
Turkey 2015-16 Cotton Crop Seen Down At 2.6 Mln Bales - USDA
Turkey is likely to produce 2.6 million bales of cotton in 2015-16, down 17 percent from last year, as per U.S. Department of Agriculture (USDA) attache. Reduced planting by cotton growers is the major reason behind the revised down forecast by the department. Also, excessive rains following planting in the Aegean region and frost in the South Anatolian region forced farmers to replant their crop. Lower returns during 2014 season persuaded farmers to plant wheat and corn.
(Click Here For Full Report)
U.S. 2015-16 Cotton Output May Fall To 2.8 Mln Tons - Cotlook
U.S. cotton production in 2015-16 seen down at 2.8 million tons, as per Cotton Outlook (Cotlook). However, it projected world cotton consumption to 23.9 million tons, down 305,000 tons from its July forecast. Cotlook lowered its estimate on consumption attributing estimated reduced consumption by India to 9 million tons. The end result will be a reduction in global inventories of 584,000 tons by the end of the year, smaller than the 597,000 tons reduction it anticipated last month.
(Click Here For Full Report).
India Imposes Anti-Dumping Duty On Chinese Fabric Imports
Government of India, through its notification no. 39/2015-Customs (ADD), issued this month, has imposed anti-dumping duty of $0.75 per metre on imports of flax or linen fabric having flax content of more than 50 percent. Went into effect 12th August, 2015, the duty will be effective for a period of five years (unless revoked, superseded or amended earlier). (Click Here For Full Report)
Cotton Crop Status In Texas
On the whole, cotton crop condition is fairly good in many cotton belts in Texas, the leading cotton producing state in the United States. Coastal Bend: Cotton growers began defoliating and harvesting is expected to begin within the next two weeks. The occasional showers are not heavy enough to shut down harvesting.
(Click Here For Full Report)
U.S. Market Through The Week
Cotton futures on the Intercontinental Exchange (ICE) gained for the second straight week following last week's U.S. government crop forecast that cut U.S. production expectations more than expected. USDA in its August release projected U.S 2015-16 cotton sharply lower by 10 percent to 13.1 million bales (480lb each) versus last month forecast. Benchmark December cotton during the current week rose 1.45 percent to 66.91 cents per pound, highest level in July 14. ICE cotton speculators raise net long positions by 22,645 contracts to 41,986 in week to August 18.
TOP STORIES THROUGH THE WEEK
India Imposes Anti-Dumping Duty On Chinese Fabric Imports
Government of India, through its notification no. 39/2015-Customs (ADD), issued this month, has imposed anti-dumping duty of $0.75 per metre on imports of flax or linen fabric having flax content of more than 50 percent. Went into effect 12th August, 2015, the duty will be effective for a period of five years (unless revoked, superseded or amended earlier). For fabric originating in or exported from Hong Kong, this duty would be applicable at $0.63 per metre, the notification said.
Benefit Of Duty Drawback Extended To Exporters
Finance Ministry Of Pakistan Informed That The Benefit Of Duty Drawback Has Been Extended To Exporters Of Textile Garments Using Polyester Staple Fiber (PSF) Purchased From The Domestic Market. The Government May Inform Local Manufacturers Of PSF Accordingly
Bangladesh July Garment Exports Fall Almost 12% On Year
Bangladesh Garment Exports Declined 11.96 Percent Year-On-Year To $2.21 Billion In July. The Fall In Exports Is Attributed To Political Crisis During January-March Period. The sector also missed the targets set for the last fiscal year, experiencing only 4.06 percent growth and earning $25.50 billion against the target of $26.90 billion.
Whitefly Attack Makes Farmers Uproot Cotton Crop
Whitefly attack on cotton crop in parts of Malwa region of Punjab has made farmers uproot about 3,000 acres of cotton in Bathinda, Muktsar, Fazilka and Mansa districts. The state agriculture department and Punjab Agricultural University (PAU) authorities said the pest attack has been severe due to humid weather.
Textile Hub Plan To Cover Nine Districts In Cotton Belt
The government of Maharashtra has reiterated its commitment to expedite its new textile hub policy unveiled a couple of months back and expand it to nine districts of the cotton belt to overcome hurdles in income-generation that lead to suicide by farmers. The state government’s decision to accord the textile industry the highest priority after agriculture springs from the massive unrest among farmers in drought-hit regions of Vidarbha, Marathwada and north Maharashtra.
Mills In TN To Bring Cotton By Ships
Textile mills in Tamil Nadu have decided to bring the crop by ships in order to curb rising transportation costs for bringing cotton by road from major growing states of Gujarat and Maharashtra. This would bring down the transport cost initially to Rs 550-700 per bale (170 kg) as against Rs 850 for bringing by road.
Most Powerlooms In Bhiwandi Halt Operation; Demands Control In Yarn Prices
Most of the powerlooms based in Maharashtra’s Bhiwandi, about three-fourths of 9 lakh powerloom units, have halted operations since 17th August, 2015. The powerlooms have been demanding control in yarn prices and permission to export cloth. The halt in operation has left many workers jobless and per-day losses of about Rs 150 crore. The strike by the powerlooms has brought half of India’s powerloom sector to a halt, since it comes over and above the production cutbacks in place since May at over 2.5 lakh units in Malegaon.
Cold Weather Delays Cotton Crop In Mississippi
Cotton producers in Mississippi are battling plant bugs, bollworms and dry weather as they work to bring their crops to harvest. Analysts said bolls on most of the cotton across the state should begin to open by mid to late August. There are reports that new arrivals will begin lately.
Powerlooms In Bhiwandi, Malegaon Stop Production
More Than 10 Lakh Powerlooms In Bhiwandi And Malegaon Have Stopped Production. The Decision Have Been Taken In View Of Huge Losses The Two Textile Centres Incurred Due To Closure Of Processing Units In Rajasthan. About 2.5 Lakh Powerlooms Are Running Only 2-3 Days In a Week Since Last One Month. Following Which, Weavers In Bhiwandi With About 8 Lakh Powerlooms, Have Decided To Stop Work From August 16 Till August 31. The Closure Has Dampened Gray Cloth Demand, Prices Of Which Have Fell Rs 3-4/Meter In Last 3 Months. No Meeting Has Been Held Till Date In This Regard Between Sizing Labour Leaders And Owners.
Cotton Acreage Slashes 9% In Haryana
Cotton sowing area has shrunk nearly 9 percent in Haryana this year compared to last year. Haryana is a key cotton growing state in northern India. As on 18th August, 2015, cotton acreage fell 9 percent to 5.83 lakh hectares in the state compared to 6.42 lakh hectares as the acreage of the same crop was at 6.42 lakh hectares int the corresponding period a year ago. However, the state government has set a target for cotton this season at 6.5 lakh hectares. The latest data of kharif crop has been released by the state agriculture department. The same department assesses average area under cotton crop in the state at 5.8 lakh hectares normally.
OUTLOOK FOR NEXT WEEK:
We at commoditiescontrol, estimate cotton prices to trade strong in the sessions to come considering all the current positive fundamentals which are expected to drive domestic as well as possible export demand in the fibre.
From a long-term view, consumption in the new season is likely to rise 10 percent and given the fresh forecast of next crop to be not more than 350 lakh bales, next year balance sheet is also most likely to remain tight.
(By Commoditiescontrol Bureau; +91-22-40015532)
0 Comments 
Post Comment 
