Mumbai (Commodities Control) – ICE cotton futures were on track for the best daily gain in nearly six months on Thursday, rebounding from 11-year lows on the back of firmer oil prices and strong shipments data.
US net cotton sales were at 147,500 running bales (RB) for the week ended March 26 in the marketing year 2019/2020, down 47% W/W and 61% from the prior 4-week average. However, exports of 400,800 RB were up 4% from the previous week, but down 3% from the prior 4-week average.
The report showed 8.627 million RBs shipped through the first 35 weeks of the MY. That is 20.8% above last year’s pace. Of the total exports reported, 12% were to China, compared to last year when the nation accounted for 10.3% of the total.
Cotton contract for May rose 158 points at 49.99 cents per lb, the biggest one-day percentage gain since Oct. 11.It traded within a range of 48.58 and 51.48 cents a lb. July Cotton closed at 49.76 cents, up 154 points. October Cotton closed at 51.02 cents, up 71 points and December Cotton closed at 51.12 cents, up 71 points.
Prices earlier in the session soared as much as 6.3%, after ending the previous session 5.3% lower and hitting their lowest levels since April 2009.
Wall Street bounced on Thursday as a recovery in oil prices outweighed the shock of weekly jobless claims soaring past 6 million. Oil prices surged over 20%.
Sentiments were lifted after U.S. President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut, and Saudi state media said the kingdom was calling an emergency meeting of oil producers to deal with the market turmoil.
The coronavirus pandemic has infected over 935,000 people across the world and killed 46,906. It has forced countries to impose lockdowns to curb the outbreak, which has drastically slowed economic activities.
Intercontinental Exchange Inc on Wednesday said the daily price limit for all Cotton No. 2 futures will expand to 4 cents per pound (400 points) above and below the prior day's settlement price.
Total futures market volume fell by 6,597 to 41,293 lots. Data showed total open interest fell 662 to 198,773 contracts in the previous session.
Cotton Outlook has slashed its estimate of 2019/20 world consumption approximately 9.27M bales to only 106.6M bales. ICAC has reduced its forecast of aggregate world consumption 6%.
Market continues to be wary of the demand destruction driven by global coronavirus crisis. Even the stimulus measures will take their own time to have any effect, given the fact that the stores are currently shut, worldwide.
Support and Resistance for Cotton #11 lies at 47.12 cents and 52.12 cents, respectively.
(Commodities Control Bureau)