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Cotton Market Update - November 2023
Intro
As we progress through November 2023, the cotton market is experiencing significant fluctuations and trends influenced by a variety of global factors. This update details the current state of the market, highlighting key data points and emerging trends.
Market Prices and Trends
US Futures Prices and Benchmarks: Most cotton benchmarks, including the ICE December and March contracts, have decreased over the past month. As of November 20, the value for March contracts stands at 81.32 cents/lb, a decline from 89 cents/lb a month ago. The A Index also decreased from 97 to 89 cents/lb in this timeframe.
International Prices: In the last month, China’s Cotton Index fell from 114 to 106 cents/lb. In India, prices decreased slightly from 90 to 87 cents/lb. Conversely, Pakistani spot prices increased from 72 to 75 cents/lb.
Supply, Demand, and Trade Analysis
USDA Report: According to the latest USDA report for the 2023/24 marketing year, global cotton production increased by 855,000 bales to 113.5 million bales, while world mill-use decreased by 484,000 bales to 115.3 million bales. This led to a 1.6 million bale increase in global ending stocks, now at 81.5 million bales.
Country-Level Production: In this marketing year, Afghanistan’s production surged by 300,000 bales to 500,000. Argentina and Paraguay saw increases of 225,000 and 175,000 bales, respectively. In contrast, mill-use decreased: Vietnam’s by 200,000 bales, Turkey’s by 100,000 bales, and the U.S. by 100,000 bales.
Economic Factors Influencing the Market
Chinese Market Dynamics: Concerns over China’s smaller harvest for the 2023/24 crop year have been mitigated by the release of import quotas and reserve sales. The reduced interest in reserve cotton suggests a slow downstream market.
Export Sales Performance: For the week ending November 9, the U.S. saw strong export sales, with China as the main buyer. However, shipments lag behind USDA’s export estimates.
Economic Data Impact: Recent U.S. economic data, including the Consumer Price Index and Retail Sales figures, indicate a slowing economy, influencing the cotton market. A weaker U.S. dollar has also boosted demand for U.S. cotton overseas.
Global Cotton Balance Sheet
WASDE Report Insights: The USDA’s World Agricultural Supply and Demand Estimates report for 2023/24 shows higher production and stocks but lower global consumption. The U.S. cotton balance sheet reflects higher production and ending stocks, with the average price for upland cotton reduced to 77 cents per pound.
Cotton News Roundup
Cotton in Battery Technology: A recent BBC report highlights an innovative use of cotton in battery technology. Researchers are exploring converting cotton fibers into carbon nanofibers, combined with seawater, to develop eco-friendly batteries. This approach could offer a sustainable alternative to traditional batteries and open new markets for cotton beyond textiles.
Sustainable Cotton Farming in Côte d’Ivoire: Better Cotton is advancing sustainable cotton farming in Côte d’Ivoire, focusing on environmentally friendly practices and improving farmers’ livelihoods. This reflects a growing trend towards sustainable agriculture in the cotton industry.
Brazil’s Agricultural Shift: From Soy to Cotton: Nasdaq reports a notable shift in Brazil’s agriculture, with farmers increasingly favoring cotton over soybeans amid dry conditions. Cotton’s resilience to drought is reshaping farming practices, particularly in Mato Grosso, where cotton cultivation is set to expand by 8% to 1.3 million hectares in the 2023/24 season. This trend may significantly alter the global supply chains for both crops, potentially affecting international market dynamics.
Cotton at TP-Exports
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References:
Cotton Incorporated Lifestyle Monitor™ – “Monthly Economic Letter November 2023.”
USDA Report – “Supply, Demand, & Trade.”
PCCA Cotton Market Update – “Cotton Market Weekly.”
Cotton Grower – “Cotton Highlights from November WASDE Report.”
BBC Future – “Batteries of the Future: How Cotton and Seawater Might Power Our Devices.”
Better Cotton – “Better Cotton Expands in West Africa with New Côte d’Ivoire Programme.”
Nasdaq – “Brazil Farmers Forced to Replace Soy with Cotton as Dry Weather Takes Toll.”