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ICE cotton futures end mixed; records worst month since 2012

1 Jul 2022 8:05 am
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Mumbai, 1 Jul (Commoditiescontrol): ICE Cotton futures ended mixed with nearby contracts advancing while July contract succumbing to selling pressure. A dip in the dollar on Thursday also made cotton cheaper for overseas buyers.

July cotton futures faded by 34 points on low OI on Thursday. The other nearbys i.e. December and March contracts were up 126 to 145 points respectively, after seeing the acreage report. December prices were still down by 23.6 cents for the month with much of that drop beginning after June 17.

ICE July cotton settled at 103.94 cents, down 0.34 cent, December closed at 98.84 cents, up 1.36 cents and March 2023 finished at 94.78 cents, 1.38 cents higher; estimated volume was 36,620 contracts. December contract registered its first quarterly drop in nine, down over 16% so far.

Nearby contracts ended higher despite the fact USDA's Planted Acres report indicated an 11% year-over-year increase. Some analysts felt with the report out of the way, traders would refocus on weather conditions. Those conditions look to be hot and dry for West Texas, the nation's largest cotton producing state.

The market continues to climb higher given the really bad conditions in the U.S. crop, analysts said. Data from the United States Department of Agriculture (USDA) showed that as of June 19, 40% of the cotton acreage was rated in good to excellent condition, down from 52% at the same time last year.

Also, "the mills, and the buyers are trying to be proactive in capturing the discounted prices before they go back to $1.00," according to analyst note.

NASS raised cotton acreage by 250,000 acres to 12.478 million. The trade was looking for 12.26 on average and 12.75 on the high end. Last year, 11.22m acres were planted.

As regards US cotton export, the old crop cotton export sales were 48,123 RBs during the week of June 23. New crop bookings were 364,415 RBs according to FAS data. That left old crop commitments at 15.6m RBs and the new crop forward sales at 11.5m RBs.

There were 792 bales of cotton sold for spot on The Seam on June 28. The average gross price was 96.23 cents/lb. ICE certified stocks continue climbing, with 13,250 bales on hand as of June 29. The Cotlook A index was 50 points lower on 6/29 to 135.50 cents. The new AWP for cotton is 116.83 cents/lb after another 19.12 cent drop.

Friday the CFTC will update the status of the managed-money funds. Potentially, they have suffered a mass liquidation, but Friday's data will be as of the past Tuesday, so the true story may not be known until next week.

The market will be closed for the Fourth of July holiday this Monday, but will reopen Monday night at its usual time.

The energy complex was sharply lower Thursday, as OPEC+ agreed to stick to its output strategy after two days of meetings. Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August.

Cotton futures have bounced back over the past three sessions, mostly on bargain hunting, after marking its worst week in over a decade as recession concerns soured the demand outlook for the commodity. The recent sharp volatility has prompted exchange operator ICE to announce multiple revisions of its daily trading limit.

Investors also took stock of week export sales data from the USDA, showing net sales of 48,100 running bales for 2021/2022, up from the previous week but down 71% from the prior 4-week average.

Cotton Dec'22 futures may find support at 103.59 cents and resistance near 104.65 cents.

(By Commoditiescontrol Bureau: +91-22-40015505)

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