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ICE Cotton Ends Up On Bullish WASDE Report

11 Dec 2019 8:43 am
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MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange moved up on Tuesday on bullish WASDE report. U.S. Department of Agriculture lowered U.S. and world production and stocks estimates for the end of the 2019/20 crop year in its monthly supply-demand report.

The most active March cotton contract ended up by 55 points at 65.93 cents per lb. Volumes in the March contract were down at 16233 contracts compared with 19314 contracts a day ago. The May contract ended up by 50 points at 66.90 cents per lb. The July 20 contract was up by 42 points at 67.59 cents/lb. March-May spread was at 97 points.

In its latest December report, the US Department of Agriculture (USDA) has scaled down its forecast for global cotton production in 2019/20 to 121.11 million bales (1 US bale = 218kg), compared to 121.94 million bales projected in November.

World ending stocks in 2019/20 are now forecast at 80.3 million bales, compared with last month's estimate of 80.8 million bales, while the outlook for U.S. ending stocks is now for 5.5 million bales compared with 6.1 million bales last month.

A decrease in production was largely offset by reduction in consumption. As per USDA consumption is likely to decrease 1.2-million-bale. The main contributor to reduction in consumption is China were consumption is likely to decline by one million-bale due to lower textile exports. The consumption forecasts for Vietnam and Pakistan were also reduced, offsetting a small increase for Uzbekistan.

Now market will be looking for USDA export sales data to be published on Thursday.

Apart from this market will be closely watching if the US implements scheduled increase in Tariff on Chinines products on 15th December. If US delays those tariffs, it will be taken as a sign a trade deal is near. However, if they are indeed implemented, then all hopes for a trade deal this year, or early next are possibly dashed.

Market are trading in a range of 63.75 -67.25 cents/lb since October. It likely that decision on tariff will result in breaking this range.

Support for March contract is at 64 cents/lb and resistance is at 67.6 cents/lb

(By Commoditiescontrol Bureau; +91-22-40015502)

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