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ICE Cotton Down On Dismal Export Sales; WASDE Report Ups Beginning, Ending Stocks Projections

12 Jul 2019 8:08 am
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MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange ended down sharply on Thursday following the dismal US export sales data, while the USDA’s World Agricultural Supply and Demand Report revised up its beginning and ending stock projections.

The most active December cotton contract ended down 1.2% at 63.08 cents per lb. Volumes in the December contract was at 14,745 compared with 18,133 a day ago. The March 2020 contract fell 1.3% to 64.20 cents per lb.

US export sales for the week to July 4 showed net sales for 2018-19 were down 62% on week with increases mainly to Vietnam (36,100 RB), Turkey (12,900 RB), Indonesia (8,400 RB), and India (6,700 RB). China reported reductions worth 10,000 RB. For 2019-20, net sales stood at 38,400 RB. Exports of 333,200 RB were down 2% on week and down 1% from the prior 4-week average. The main exports destinations were India (79,100 RB), Vietnam (69,000 RB), Turkey (59,100 RB), Bangladesh (26,300 RB), and China (17,900 RB). Net sales of Pima cotton totalled 700 RB compared with 2,500 RB a week ago. Exports of 10,800 RB were down 34% on week and 40% from the prior 4-week average.

Meanwhile, the WASDE report for 2019-20 revised its US beginning and ending stock projections higher from the June report. Beginning stocks were revised higher by 350,000 bales on lower domestic consumption and exports in 2018-19.

“A reported slowdown in domestic spinning results in a 100,000-bale decline in consumption and exports are reduced 250,000 bales based on the pace of recent shipments,” the report said.

Ending stocks for the year are now higher by 300,000 bales to 6.7 million, or 33% of use.

“In 2019-20, world consumption is seen lower as reductions for Bangladesh and China more than offset mill-use gains for India, Turkmenistan, and Vietnam. World production is nearly 500,000 bales higher this month in both 2018-19 and 2019-20, largely due to increases in India’s crop,” the report said.

On the weather front, traders are likely to watch out for Hurricane Barry and the impact it has on the crop. The hurricane, forming over the Gulf Coast, is expected to make land in New Orleans on Friday.

Markets are oversold and all the negative news are discounted in price. In the case of disruptions to the crop, we may see a pullback rally. Support for December contract is 62.75 cents/lb and resistance is 65.5cents/lb.

(Commoditiescontrol Bureau)

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