Mumbai, 9 Apr (Commoditiescontrol): ICE cotton futures edged up on Monday, rebounding from their lowest in more than two months, supported by a weaker U.S. dollar, while focus shifted to monthly supply and demand report from the U.S. Department of Agriculture (USDA) later this week.
The dollar slipped as investors focused on U.S. inflation data later this week, making cotton less expensive for overseas buyers.
Putting a floor under prices, global oil benchmark Brent prices stayed high as supplies faced fresh threats from escalating conflict in the Middle East. Higher oil prices make cotton-substitute polyester more expensive.
ICE Cotton contracts for Jul closed at 88.39 cents, 18 points lower. Oct settled at 83.49 cents, losing 79 points. Mar ended 97 point weak at 83.54 cents. May settlement contract recorded third straight week of loss, down 513 point or 5.6%. New crop futures continue to lead cotton futures lower.
Certified cotton stocks, which can be delivered against the contract, were at 93,324 bales compared with 67,576 bales on April 1, according to ICE data.
The U.S. Department of Agriculture's (USDA) weekly export sales report on Thursday showed net sales of 84,900 running bales for 2023/2024, down 14% from the previous week but up 4% from the prior 4-week average.
The weekly Crop Progress report had cotton planting across the US at 5%, which was down 1% from the 5-year average pace.
U.S. private forecaster AccuWeather expects an above-average 2024 Atlantic hurricane season with a near-record number of storms and a greater-than-usual risk of direct impacts in parts of Florida, Texas and the Carolina, it said on Wednesday.
There's expectation for better demand, especially from India and China and the demand will impact the ending stocks even more. Yet, stifled demand due to high cotton prices above 90 cents, makes 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 USDA World Agricultural Supply and Demand Estimates (WASDE) report 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.
USDA’s Ag Attache raised Brazil’s cotton production by 340,000 bales to 14.9 million, but cut carryout by 200,000 to 11 million. On net ending stocks were raised to 6.2m bales. The initial outlook for 24/25 cotton has area increasing to 1.87m HA and production up to 15.35 million.
Elsewhere, USDA raised its forecast for Australia's cotton production in the current season by 200,000 bales to 5 million and said the country would produce 5.5 million bales in the 2024/2025.
The Seam reported 560 bales sold on the April 4th sale for an average price of 68.38 cents, a 2.62 cent drop from the previous day. The Cotlook A Index was back down by 150 points to 92.60 cents/lb on Apr 5. The AWP weakened by another 140 points to 69.48.
Cotton spec traders were shown 3,900 contracts less net long for the week after a bout of long liquidation. The CoT report had the group 80,600 contracts net long as of the settle. Commercial cotton traders were adding new hedges, though the shorts offset the new longs for a 4,000 contract swing to 127,600 contracts net short as of April 2.
Investors now await the release of the WASDE report, due on April 11.
For Tuesday, support for the May Cotton contract is at 85.77 cents and 84.88 cents, with resistance at 87.89 cents and 89.12 cents.
(By Commoditiescontrol Bureau: 09820130172)
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