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ICE Cotton Manages Gainful Closing as Traders Eye WASDE Report

6 Mar 2021 8:27 am
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Mumbai (Commodities Control) – ICE cotton futures edged up on Friday, buoyed by bets for a reduction in U.S. cotton planting estimates in a federal report due next week, though caution over the report kept prices in a narrow range. Also helping the market end with gains were the strength outside markets of grains and energies.

On Friday, May Cotton closed at 87.76 cents, up 62 points, July settled at 88.67 cents, up 54 points and December cotton ended at 84.54 cents, up 54 points. Cotton contracts for May Cotton ended down 107 points for the week and for the month, and up 782 points for the year.

Market participants strongly believe that the crop is shrinking and consumption is going up, thus awaiting the U.S. Department of Agriculture (USDA) monthly World Supply and Demand Estimates (WASDE) report due on Tuesday. Cotton Traders add that the market could still fall if estimated reductions in the cotton crop size and increased exports in the report come below expectations.

Meanwhile, experts see core speculators holding onto their positions and expect the bull market to resume.Many cotton-producing counties in South and West Texas are currently in a moderate to severe drought and that should support prices.

Limiting gains for the natural fiber was a firmer dollar which raised the cost of purchasing cotton for buyers in other currencies.

The weekly data release from CFTC showed managed money cotton traders were 66,031 contracts net long as of 2nd March. That was a 6,423 contract reduction on the week via long liquidation. The commercial position covered 10,383 shorts on the week, leaving them 146,459 contracts net short.

Total futures market volume fell by 10,924 to 27,002 lots. Data showed total open interest gained 115 to 237,608 contracts in the previous session.

Support and resistance for Cotton #2 lies at 86.32 and 88.54 cents per lb respectively.

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