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ICE Cotton Futures Rebound as Traders Cover Shorts Ahead of Juneteenth

19 Jun 2024 8:46 am
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Mumbai, 19 Jun (Commoditiescontrol): ICE cotton futures edged higher on Tuesday, recovering from a three-and-a-half-year low as traders covered short positions ahead of the Juneteenth federal holiday. Positive sentiment in equities and oil also contributed to the uptick.

The July ICE cotton futures contract increased by 109 points, settling at 71.03 cents per pound. The December contract rose 99 points to 72.76 cents, while the March contract added 100 points to close at 74.05 cents. The December contract had hit its lowest since November 2020 at 70 cents in the previous session.

Last week, July futures declined by 287 points and December futures by 75 points, with deferred contracts experiencing smaller declines ranging from 8 to 34 points. The recent dip into the 70-cent range triggered a price limit reduction to 3 cents per pound.

The market will be closed on Wednesday in observance of Juneteenth.

Regarding weather conditions and plantation updates, the National Agricultural Statistics Service (NASS) reported a 2% decline in condition ratings, now at 54% good/excellent. The overall score via the Brugler500 index dropped 7 points to 346. Notably, Alabama and Arizona saw condition ratings drop by 10 points, Mississippi by 11 points, and Texas by 7 points, while Georgia improved by 1 point.

In terms of cotton sales, recent USDA export data revealed sales of 186,600 running bales (RB), up 19% from the previous week but 3% below the four-week average. China, the leading consumer, accounted for 73,400 RB. Net sales for the 2023/2024 marketing year increased by 28% from the previous week but were 2% lower than the prior four-week average. Weaker-than-expected shipments further pressured cotton prices.

The USDA's World Agricultural Supply and Demand Estimates (WASDE) report indicated a reduction of 500,000 bales in U.S. export projections, now at 11.8 million bales. Consequently, old crop stocks increased by 450,000 bales to 2.85 million, and new crop ending stocks rose by 400,000 bales to 4.1 million.

Globally, the 2023/24 carryout increased by 490,000 bales to 80.97 million, while new crop projections rose by 489,000 bales to 83.49 million, reflecting higher beginning stocks and production but reduced trade and consumption.

ICE certified cotton stocks were down 920 bales on June 14, totaling 137,063 bales. The Cotlook A Index rose 30 points to 82.15 cents/lb on June 17, while the USDA Average World Price (AWP) fell 81 points to 57.32 cents per pound last week, effective through Thursday.

China's agriculture ministry raised its cotton import forecast for the 2023/24 crop year by 200,000 metric tons. Traders are closely monitoring technical support levels for the December contract at 71.30 and 69.83 cents, with resistance at 73.85 and 74.93 cents. CFTC data showed managed money spec funds at their largest net short position in nearly five years, totaling 35,735 contracts, an increase of 11,827 contracts for the week ending June 11.

(By Commoditiescontrol Bureau: 09820130172)

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