Gujcot Trade Assocation

Monthly Rate Movement Report – May-2023

Posted : April 18, 2024

Dear All Cotton Friends,

In our mission to give Daily Spot Rate Team Gujcot is getting valuable support from Gujcot broker’s panel. We appreciated their humble service to the trade. Gujcot Team is giving daily closing of Indian and foreign futures rates.

In this report we have provided Following Rates during the month.

Daily Physical Spot Rate

MCX Cotton Daily Closing Rate

USD-INR Exchange Rate Closing

Cotlook Index

ICE Future Closing

NCDEX Kapas Rate

MCX Future Closing

NCDEX and MCX converted into Rs. Candy Rate

We hope it will be useful to all the stake holders of Textile Value Chain.

During the month of May, NY July cotton future have not been able to break out of the long-term range of 79-86. The latest WASDE report was somewhat favorable for the market, with an increase in U.S. exports and a decrease in ending stocks. Export sales have been decent, leading the U.S. Department of Agriculture (USDA) to raise the US export estimate from 12.2 to 12.6 million bales.
Despite these positive factors for cotton in the U.S., the market has been unable to break free from the long-term range due to certain macroeconomic situations in the U.S. and the world. Concerns about a potential recession, the U.S. debt ceiling crisis, and fallout of some major US banks have been major factors restraining the market from going up.
On the weather front, there have been some favorable signals from Texas that have pushed down the December NY futures. As a result, the new hedge will be on December NY, which has now become inverted by 401 points compared to NY July. In an inverted market, rolling over positions can be costly, which is a concern for the sellers.
In India, farmer selling has been brisk, and for the first time in Indian cotton history, the country has recorded the highest May cotton arrival. In anticipation of higher prices, farmers have held a significant quantity of Kapas (seed cotton), but due to the downward trend in cotton and cottonseed prices, their hopes have been dashed, and they have been selling Kapas freely at lower rates, near or below Rs. 1,400 per 20 Kg or Rs 7,000 per Quintal
This surge in farmer selling and slow off-take in Indian yarns has led to a continuous downward trend in cotton prices. Prices started around 61,750 Rs per candy and slipped to nearly 56,000 Rs per candy before correcting in the last week. However, Indian farmers still hold a large quantity of Kapas and are waiting for the market to rise.
The USD-INR exchange rate has remained stable between 81.79 and 82.82.
Despite the significant decline in cotton prices, India's raw cotton exports remain negligible.
Now, the front month of NY future is December future, and the Indian Shankar-6 variety is higher in basis compared to December NY. As of the last day of the month, the Indian basis was near 1,000 against December NY.
Indian mills are facing difficulty in finding significant buyers for their yarn, as global demand of yarn is limited. This has created a cash crunch for mills, and due to funding problems and slow demand, mills are not actively covering cotton in large quantities.
The upcoming month of June marks the beginning of the monsoon season, and farmers will be busy with sowing activities. In North India, sowing is nearly complete, and despite the low cotton prices, farmers seem to be inclined to plant more cotton. In Central and South India, sowing activity will pick up pace in June.
There is hope for a favorable monsoon season ahead.