Mumbai, 27 Mar (Commoditiescontrol): ICE cotton futures edged up on Tuesday, benefiting from bargain buying and fresh demand after prices fell to a month's low in the previous session. Investors have squared positions in the run up to a federal planting intentions report this week.
The dollar index eased 0.2%, making the natural fibre cheaper for overseas buyers.
ICE Cotton contracts for May closed at 93.41 cents, 139 points higher. Jul settled at 93.86 cents, adding 131 points. Dec ended 29 point strong at 84.30 cents. May settlement contract lost 1.8% last week.
Old crop cotton closed 80 points off the session highs, but still 116 to 139 points in the black. New crop futures were also higher, but ended 10 points off the session high for 10 to 30 point gains.
Analysts are looking for Thursday’s Planting Intentions report to show between 10.4m and 11.3m acres for 2024/25 cotton. The average 11.3m acre estimate would be a 1.1m acre increase from last year and is 300,000 acres over USDA’s Outlook Forum assumptions.
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. That is 6% back of the 99% average pace for this point in the MY. Shipments were tallied at MT high of 397,297 RB. That took the MY total to 55% of the USDA forecast, 2% ahead of the average 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 pressurizing 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 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.
USDA’s weekly Cotton Market review showed 3,612 bales were sold at spot for the week, averaging 87.14 cents/lb. The season’s total cash sales reached 796,000 bales vs 494,000 bales last year and 1.54m bales 2yr ago.
The Cotlook A Index for Mar 21 was 85 points lower to 97 cents flat. The AWP was revised 360 points lower to 72.50 cents per pound, in effect for farm program purposes through next Thursday. ICE certified stocks were shown at 41,756 bales as of Mar 20.
CFTC reported the cotton spec traders were dropping longs and adding new shorts during the week that ended Mar 19. That reduced their net long by 3,600 contracts to 89,522. Commercial cotton hedgers reduced their net short by 4,600 contracts to 127,900.
The U.S. Department of Agriculture (USDA) will release the planting intentions report at noon EDT (1600 GMT) on Thursday.
For Wednesday, support for the May Cotton contract is at 92.20 cents and 91.00 cents, with resistance at 94.44 cents and 95.48 cents.
(By Commoditiescontrol Bureau: 09820130172)
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