Mumbai, 22 Mar (Commoditiescontrol): ICE cotton futures edged up on Thursday, helped by positive exports sales data from the U.S. Department of Agriculture (USDA) and gains in grains and equities.
However, the dollar index regaining strength after the Swiss central bank's surprised rate cut, made buying natural fibre more expensive for overseas buyers.
ICE Cotton contracts for May closed at 92.21 cents, 3 points higher. Jul settled at 92.26 cents, adding 14 points. Dec ended 12 point strong at 83.92 cents. The contract had hit its lowest since Feb. 21 in the previous session due to a rally in the dollar, as well as a downbeat sentiment across oil and equity markets.
After printing a daily range on both sides of UNCH the cotton market ended the session in the black though by less than 50 points May prices traded from -34 to +132 points on the day before closing with a 3 point gain. May is still down by 173 points for the week’s move.
The United State Department of Agriculture (USDA) Weekly Export Sales data from the week that ended Mar 14 showed 92,620 RBs of old crop cotton and 40,500 RBs of new crop was sold. That brought old crop commitments to 10.71m RBs, a 4% lag from last year’s pace, and new crop commitments to 99,500 RBs, still 27% behind last year's pace.
The destinations were mainly China at 183,700 RB and Vietnam at 61,300 RB. China is one of the top consumers of U.S. cotton.
The report also showed net sales of 92,600 RB for 2023/24, up 8% from the previous week and 20% from the prior 4-week average.
There's expectation for better demand, especially from India and China and the demand will impact the ending stocks even more, dealers said. Yet, stifled demand due to high cotton prices above 90 cents, makes it difficult for mills to buy, which is pressurising 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 on Friday 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. The U.S. Department of Agriculture (USDA) will release the planting intentions report on March 28.
Meanwhile, a U.S. weather forecaster on Thursday projected El Nino conditions will likely end by spring this year but saw a 62% chance that a weather pattern characterized by unusually cold temperatures in the Pacific Ocean, La Nina, will develop during June-August.
Elsewhere, the Australian agriculture ministry raised its estimate for the country's 2023/24 cotton production. It estimated cotton production at 1 million tons versus previous forecast of 925,000 tons.
The Seam had 2,064 bales sold online on Mar 20 for an average gross price of 69.27 cents. The Cotlook A Index was 5 points weaker to 98.40 cents/lb. The AWP was revised 360 points lower to 72.50 cents per pound. ICE certified stocks were shown at 41,756 bales as of Mar 20.
This week’s Commitment of Traders report revealed managed money spec funds trimming 3,201 contracts from their net long in cotton futures and options. They took that net position to 93,160 contracts as of Tuesday March 12.
For Friday, support for the May Cotton contract is at 91.53 cents and 90.86 cents, with resistance at 93.19 cents and 94.18 cents.
(By Commoditiescontrol Bureau: 09820130172)
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