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ICE cotton futures retreat lower ahead of WASDE report

10 May 2024 8:34 am
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Mumbai, 10 May (Commoditiescontrol): ICE cotton futures softened on Thursday, as traders opeted for caution ahead of a monthly federal demand and supply report. Cotton prices continued to slide despite external factors such as weaker dollar, firm crude oil prices and strong weekly export sales data remain supportive.

ICE Cotton contracts for July closed at 77.75 cents, 146 points lower. Oct settled at 78.16 cents, losing 119 points. Mar ended 118 point weak at 78.01 cents. Cotton limits are back to 3 cents with July slipping back in the 70 cent level. The US dollar index was down 336 points, with crude oil up 56 cents.

Cotton futures closed out last week on a better note for the bull. However, July was down 284 points or 3.51% for the week, with December 134 points lower.

The U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 253,700 running bales (RB) for 2023/2024, up noticeably from the previous week and the prior 4-week average. The report also showed exports of 249,600 RB, up 39% from the previous week and up 2% from the prior four-week average.

Investors focus is now on the U.S. Department of Agriculture's (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report on Friday.

Last week, the USDA’s Cotton Systems report showed 758 RB cotton consumed by US mills in March, up 48.6% from last year but 25.9% below the Feb use total. Stocks were at 1,307 RB, the lowest for March going back 2015.

Weather condition is expected to improve for a wide swath of the Southeast US over the next week, stretching from Central/Eastern Texas and parts of the panhandle to the East Coast. This may help to slow what has been a fast paced planting season thus far.

Earlier this week, the US cotton crop was reported at 24% planted as of Sunday, a 9% advance over the last week. The 5 year average planting pace for the crop is 20% complete by May 5, according to USDA/NASS. Of the major cotton acreage states, Texas was 3% faster than normal at 24%, with Georgia 4% ahead at 21%.

According to the 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 down 791 on decertification on May 8 at 167,979 bales. The Cotlook A Index was up 55 points on May 7 at 85.40 cents/lb. The AWP dropped another 91 points to 59.64 on Thursday and is good through next week.

Commitment of Traders data shows managed money in cotton futures and options flipping to a new net short position during the week that ended on April 30 to -1,934 contracts that was a bear move of 11,435 contracts on the week the ended on Tuesday.

For Friday, support for the Jul Cotton contract is at 77.51 cents and 76.42 cents, with resistance at 79.96 cents and 81.32 cents.

(By Commoditiescontrol Bureau: 09820130172)

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