Mumbai, 5 Apr (Commoditiescontrol): ICE cotton futures slide down for the third straight session on Thursday, weighed by sluggish demand and strong dollar denting the natural fiber appeal.
However, putting a floor under prices, Global oil benchmark Brent prices stayed high as supplies faced fresh threats from escalating conflict in the Middle East. Higher oil prices make cotton-substitute polyester more expensive.
ICE Cotton contracts for May closed at 87.14 cents, 184 points lower. Jul settled at 88.57 cents, losing 161 points. Dec ended 58 point weak at 83.52 cents. May settlement contract recorded second straight week of loss, down 15 point or 0.16%. Front month contract closed March a net 8.2 cents/lb in the red after setting new highs in Feb. Open interest in March peaked near 130,000 contracts at the Feb high, but has since slipped to near 110,000 contracts.
May cotton is now back to the 18-week moving average and nearly 17 cents/lb off the contract highs. New crop futures ended with 37 to 58 point losses. Dec is 1.73 cents/lb off the Feb high.
The U.S. Department of Agriculture's (USDA) planting intentions said U.S. cotton planted area for 2024 is estimated at 10.7 million acres, below trade estimates of 10.9 million acres. However, the 2024 estimate was up 4% from last year.
The report added that compared with last year, acreage increases are expected in most cotton-estimating States, except Georgia, Kansas, New Mexico, Texas, and Virginia. Texas and Georgia, the largest cotton-producing States, are both expecting a 1% decrease in area planted to all cotton.
NASS report suggested cotton planting finishing for Arizona at 6% and Texas as 5%. The 5-yr average pace would be 4% planted as of Mar 31.
U.S. private forecaster AccuWeather expects an above-average 2024 Atlantic hurricane season with a near-record number of storms and a greater-than-usual risk of direct impacts in parts of Florida, Texas and the Carolina, it said on Wednesday.
There's expectation for better demand, especially from India and China and the demand will impact the ending stocks even more. 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.
USDA’s Ag Attache raised Brazil’s cotton production by 340,000 bales to 14.9 million, but cut carryout by 200,000 to 11 million. On net ending stocks were raised to 6.2m bales. The initial outlook for 24/25 cotton has area increasing to 1.87m HA and production up to 15.35 million.
Elsewhere, USDA raised its forecast for Australia's cotton production in the current season by 200,000 bales to 5 million and said the country would produce 5.5 million bales in the 2024/2025.
The Cotlook A Index was back down by 235 points to 95.60 cents/lb on Mar 28. The AWP was 162 points weaker to 70.88 cents/lb. ICE certified stocks were 14,000 bales higher to 81,664 bales for Apr 1.
Speculators cut net long position by 5,301 contracts to 58,373 contracts in ICE U.S. cotton futures in the week of March. 26.
Meanwhile, traders are awaiting USDA weekly export sales report release later today.
For Friday, support for the May Cotton contract is at 86.41 cents and 85.68 cents, with resistance at 88.56 cents and 89.98 cents.
(By Commoditiescontrol Bureau: 09820130172)
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