Cotton Spot Prices have declined by Rs. 500 in a week from Rs. 17,500 to Rs. 17,000 per maund amid a slow demand and ample availability of both domestic and Afghani Cotton.
Karachi Cotton Association kept the spot prices unchanged at Rs. 17,000 per maund on Friday, after cutting the prices further by Rs. 200 on Thursday.
Phutti Prices across Punjab also dropped by Rs. 600 to Rs. 800 during previous weeks but have recovered marginally during this week. Prices across Bahawalpur, Bahawalnagar, Jhang, and Multan are hovering around Rs. 7,600-7,650 on average, up from Rs. 7,000-7,250 when the week began.
Prices in Faisalabad, Kasur and Toba Tek Singh are also reported at Rs. 7,400-Rs. 7,600 per maund, nearly Rs. 200 higher compared to a week earlier.
Traders talking to ProPakisani noted that the opposite trend in the Phutti market against Spot prices is ‘not rare yet irregular’ phenomenon. It’s driven by the lower quality of Cotton with not many buyers, while Phutti stands firm as these are last pickings and not much is left in the market with farmers hoping for demand reversal.
“Weak demand in the market is not solely due to the gas price hikes but is also influenced by the availability of Afghan cotton, offered at approximately Rs. 16,800 per maund,” stated Rashid Khan, a commodity trader and Head of Sales at Fund Marketing International.
He also highlighted the slow business atmosphere in the US and EU fueling the sluggish demand due to the upcoming holiday season, where retailers are primarily focused on selling existing inventory rather than making new purchases.
He added that post-COVID, the consumer buying patterns have shifted from impulsive buying to strategic purchases.
Textile Exports broke a 13-month dropping streak in October 2023, clocking in at $1.43 billion with a 5 percent YoY rise in exports over $1.36 billion reported in October 2022. Exports during the first four months of the FY24 (Jul-Oct) stood at $5.5 billion, down 6.3 percent against $5.9 billion during the same period last year.
But the long-term outlook for the industry is worrisome as the recent 100 to 130 percent hike in gas prices which adds to the removal of regionally competitive energy tariffs earlier on IMF demand, have brought a string of protests from Textile millers and manufacturers which can potentially extend to shutdowns.
Khan noted that in recent market speculations, unconfirmed reports suggest that China has halted its purchases of Coarse count, resulting in elevated inventories in Pakistan and creating ripples in the local market. While unofficial activities were noted, no official business transactions have been reported as of yesterday.
China’s cotton market currently stands at approximately 15,000 yuan/ton, equivalent to about 95.00 USC per lbs.
The market is experiencing pressure due to the commencement of the new crop arrival in China and also in part due to restrictions in exporting cotton to USA and EU due to alleged human rights issues in Xinjiang region, further adding strain to its balance sheet during this seasonal period.
Thanksgiving weekend sales soared to $38 billion, marking a 7.8 percent increase from the previous year’s $35.3 billion. Black Friday witnessed consumers spending $9.8 billion in U.S. online sales, reflecting a 7.5 percent rise from the $9.1 billion spent the previous year.
Cyber Monday surpassed these figures, with e-commerce spending in the U.S. totalling $12.4 billion, up 9.6 percent from the $11.3 billion recorded the previous year.
“Looking ahead, holiday sales for November and December are anticipated to rise by 3 percent to 4 percent compared to the previous year, reaching an estimated range of $957.3 billion to $966.6 billion, according to the National Retail Federation (NRF)” added Khan.
On the commodities front, the current spot future, set for March 2024, holds 3.11 million bales unfix. The oil market is influenced by crude oil cuts and OPEC intervention, resulting in dynamic shifts.
Meanwhile, cotton futures remain firm and quiet, hovering around $0.79 for the past few days while United States has achieved a 66 percent commitment level, in line with their target for the current marketing year.