Mumbai, 18 Apr (Commoditiescontrol): ICE cotton futures declined to a near four-month low on Wednesday, pressured by liquidation from speculators, while a stronger dollar and downbeat sentiment in oil and grain markets also weighed on the natural fiber.
The dollar index stayed near its highest level in over two months, making cotton more expensive for overseas buyers.
Oil prices drifted lower, with the market downplaying the risk of a broader regional conflagration after Iran's weekend attack on Israel. Lower oil prices make polyester - a cotton substitute - less expensive
ICE Cotton contracts for May closed at 79.56 cents, 173 points lower. Jul settled at 81.33 cents, losing 176 points. Dec ended 60 point weak at 78.54 cents. Trade in the cotton market had futures continuing the slide, with losses of 30 to 173 points, left by the nearbys.
The market is pressured because speculators are liquidating position. Since, the technicals and charts look terrible, There's no reason for anyone to buy anything, a local trader said.
The Cotton On-Call report from CFTC showed unfixed call sales at 10,572 contracts for May as of 4/5, a 4,198 drop from the week previous. For July, unfixed call sales are 22,995 contracts, with the total at 68,015 contracts.
Cotton planting across the US has now been reported at 8% complete according to NASS, even with the average pace in the last 5 years. That was also 1% ahead of last year. Cotton planting in the two major cotton growing states is off to a slightly slower start, with Texas at 13% complete and Georgia 1% planted, both 1% back of normal, despite the national level on par with average.
The U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 81,500 running bales for 2023/2024, down 4% from the previous week, and 10% from the prior 4-week average.
According to the World Agricultural Supply and Demand Estimates (WASDE) report on Thursday, world trade for 2023/24 was projected 700,000 bales higher this month to nearly 44 million.
USDA left the US cotton balance sheet alone this month, as they wait for final production data next month. Stocks are still at 2.5 million bales, though the US average farm price was trimmed by a penny to 76 cents. The World cotton S&D table was a 0.26 million bale cut to stocks at 83.08 million bales, mainly on tighter carryover from the previous crop year.
World trade for 2023/24 was projected 700,000 bales higher this month to nearly 44 million, as a 1.3-million-bale increase in China's imports was partially offset by reductions for Pakistan and Indonesia, as per the report.
Global ending stocks for 2023/24 were projected down nearly 300,000 bales in April as lower stocks across West Africa, Australia and Brazil more than offset higher supplies in China, the report added.
ICE certified cotton stocks were up another 2,269 bales on April 16 at 171,700 bales. The Cotlook A Index was back up 70 points to 89.60 cents/lb on April 16. The AWP dropped another 405 points to 65.43 last Thursday and is good through this Thursday.
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.
Traders now await USDA weekly export sales report release later today.
For Thursday, support for the Jul Cotton contract is at 80.23 cents and 79.13 cents, with resistance at 83.11 cents and 84.89 cents.
(By Commoditiescontrol Bureau: 09820130172)
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