Mumbai, 13 Mar (Commoditiescontrol): ICE cotton futures ended firm on Tuesday, rising from two-week low hit earlier in the day, tracking gains in broader financial markets.
Sticky U.S. inflation did spur concerns on Fed easing rates sooner. That send U.S. dollar higher, making natural fiber expensive for buyers in other currencies.
ICE Cotton contracts for May closed at 95.23 cents, 17 points higher. Jul settled at 94.59 cents, adding 25 points. Dec ended 40 point strong at 83.67 cents. May ended the week net 29 points or 0.30% lower.
Front month cotton futures closed 17 to 40 points higher. That took the May contract back to net UNCH for the week’s move. The May contract printed a 172 point range on the day from -101 to +71 points.
There are some expectations for better demand, especially from India and China and the demand will impact the ending stocks even more, dealers said.
United State Department of Agriculture (USDA) came out with the market friendly info on Friday. The federal agency surprisingly cut the cotton yield by another 23 lbs per acre to 822. That lowered production and tightened stocks with no other change to use. Cotton stocks are now projected at the tightest since 12/13 at 2.5 million lbs. Stocks/Use is still just a 2-year low.
On Thursday, FAS reported 52,000 RBs of cotton was sold for export during the week that ended Feb 29. That was up from the MY low last week but still 100,000 RBs shy of the 4-wk average. The week’s exports were listed at 331,000 RBs.
There is stifled demand due to high cotton prices as prices are above 90 cents, making it difficult for mills to buy, which is pressurizing the market. A slight decrease in supply and demand is expected in the near term, with prices likely to remain volatile but will hold between 90-96 cents.
The U.S. Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (WASDE) report on Friday noted that 2023/24 U.S. cotton forecasts show lower production and ending stocks relative to last month.
The report also showed global cotton consumption is almost 500,000 bales higher with gains for China and India.
The updated 7-day QPF from NOAA has heavy rain fall for central AL/GA of 5”. The surrounding Southeast states should also expect rain, though the forecast dries up by central Texas.
Elsewhere, the Australian agriculture ministry raised its estimate for the country's 2023/24 cotton production. It estimated cotton production at 1 million tons versus previous forecast of 925,000 tons.
The Cotlook A Index retreated by 335 points back to 101.60 cents for Mar 11. The Seam reported 8,510 bales sold online on Mar 7 with an average gross price of 87.17 cents. The AWP was 76.88 cents/lb. ICE certified stocks were 21,233 bales as of Mar 8.
CFTC’s weekly Commitment of Traders report showed managed money funds were adding another 2,323 contracts to their net long in cotton futures and options. They took that net position to 96,361 contracts as of Tuesday March 5, the largest since October 2021.
For Wednesday, support for the May Cotton contract is at 94.26 cents and 93.30 cents, with resistance at 95.98 cents and 96.74 cents.
(By Commoditiescontrol Bureau: 09820130172)
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