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Wet Weather Concerns Lift ICE Cotton Futures

22 May 2024 8:44 am
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Mumbai, 22 May (Commoditiescontrol): ICE cotton futures rose on Tuesday, driven by worries over persistent wet weather affecting crop planting progress. The July cotton contract gained 35 points to close at 76.38 cents per pound. Meanwhile, December contracts edged up by 27 points to 75.28 cents per pound, and March contracts increased by 26 points to settle at 76.89 cents per pound. The July contract had previously dropped 1.7% last week.

An analyst noted that significant price movement in the contract is unlikely unless it rallies and closes above the 77-cent mark. Recent external factors have negatively influenced cotton prices. On Tuesday, crude oil was down by $1.02, and the US dollar index was up by 75 points, providing little support to cotton.

The USDA's National Agricultural Statistics Service (NASS) reported that as of Sunday, 44% of the US cotton crop had been planted, an 11% increase from the previous week. This aligns with the five-year average and is 2% ahead of last year. Texas was 2% behind its five-year average at 37%, while Georgia was 3% behind at 47%.

Traders are now awaiting the USDA's weekly export sales report on Thursday for more insights into demand. Last week's report showed net sales of 156,500 running bales (RB) for 2023/2024, a 38% decrease from the previous week, with exports down 4% to 238,800 RB.

Globally, the USDA's World Agricultural Outlook Board (WAOB) revised its carryout estimates for the 2023/24 cotton season downward by 2.6 million bales to 80.48 million, due to a smaller carry-in. However, the WAOB projected an increase in 2024/25 ending stocks by 2.53 million bales to 83.01 million.

ICE certified cotton stocks decreased by 1,695 bales on May 20, standing at 190,653 bales. The Cotlook A Index dropped 25 points to 85.60 cents per pound, and the AWP fell another 18 points to 59.46 cents per pound.

Large managed money speculators added 1,615 contracts to their net long position as of May 14 but remained net short by 15,314 contracts, the largest net short position in nearly 11 months. Traders are closely watching technical support levels for the July cotton contract at 75.34 and 74.29 cents, with resistance at 77.07 and 77.75 cents.

Despite occasional rallies, the cotton market faces pressure from weak demand and profit-taking. Market participants are monitoring weather conditions and planting progress for future price directions. Additionally, President Joe Biden's recent announcement of steep tariff increases on Chinese imports may influence market dynamics.

(By Commoditiescontrol Bureau: 09820130172)

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