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ICE cotton futures soften on stronger dollar amid slide in oil, equities

25 Apr 2024 8:26 am
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Mumbai, 25 Apr (Commoditiescontrol): ICE cotton futures ended lower on Wednesday, due to sluggish sentiment in the grains, oil and financial markets, while a stronger dollar also pressured the natural fiber.

Oil prices were moderately lower as worries over conflict in the Middle East eased and business activity in the world's largest oil consumer slowed. Lower oil prices make cotton-substitute polyester less expensive.

ICE Cotton contracts for May closed at 79.51 cents, 71 points lower. Jul settled at 81.01 cents, losing 71 points. Dec ended 39 point weak at 77.69 cents.

Cotton complex was largely influenced by outside market forces such as crude oil and dollar. Traders now await exports sales data release later today.

Last week, cotton complex witnessed continuation of the death spiral liquidation for May as longs get out before deliveries, with rest of the contracts following along. As a result, the contract concluded the week 4.8% lower.

Cotton on-Call report showed 6,900 contracts of unfixed call sales for May, down 3,672 on the week. July was up 5,426 contracts to 28,421 contracts. Overall, on the week unfixed call sales were up 2,828 contracts to 70,843 contracts. The unfixed call purchases are large for December at 40,708 contracts.

On planting front, the US cotton crop is now 11% planted as of April 21 according to the NASS Crop Progress report from this afternoon. That matches both the 5-year average and last year’s pace. The largest state of Texas was on pace with normal at 16% complete, with Georgia 4% and 1% behind normal.

Elsewhere, the U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 146,100 running bales for 2023/2024, up 79% from the previous week and 64% from the prior four-week average. The report also showed exports of 266,700 running bales, down 3% from the previous week and 24% from the prior four-week average.

According to the World Agricultural Supply and Demand Estimates (WASDE) report on Thursday, world trade for 2023/24 was projected 700,000 bales higher this month to nearly 44 million.

USDA left the US cotton balance sheet alone this month, as they wait for final production data next month. Stocks are still at 2.5 million bales, though the US average farm price was trimmed by a penny to 76 cents. The World cotton S&D table was a 0.26 million bale cut to stocks at 83.08 million bales, mainly on tighter carryover from the previous crop year.

World trade for 2023/24 was projected 700,000 bales higher this month to nearly 44 million, as a 1.3-million-bale increase in China's imports was partially offset by reductions for Pakistan and Indonesia, as per the report.

Global ending stocks for 2023/24 were projected down nearly 300,000 bales in April as lower stocks across West Africa, Australia and Brazil more than offset higher supplies in China, the report added.

ICE certified cotton stocks were up another 192 bales on April 23 at 176,977 bales. The Cotlook A Index was back up 150 points to 88.55 cents/lb on April 23. The AWP dropped another 325 points to 62.18 last week and is good through this Thursday.

Commitment of Traders data confirmed a mass exodus of the managed money long in cotton futures in options in the week that ended on April 16, of 25,890 contracts. That was the largest bear move in a one-week Tuesday/Tuesday move since CFTC started the data series back in 2006 taking the net long down to just 36,142 contracts.

For Thursday, support for the Jul Cotton contract is at 80.61 cents and 80.20 cents, with resistance at 81.71 cents and 82.40 cents.

(By Commoditiescontrol Bureau: 09820130172)

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