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ICE cotton futures rebound on weak dollar, positive financial market sentiment

4 May 2024 8:38 am
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Mumbai, 4 May (Commoditiescontrol): ICE cotton futures rebounded sharplu on Friday, coming off 18-month low, supported by a weaker dollar, positive sentiment from the wider financial markets and some technical correction after a downbeat week.

ICE Cotton contracts for May closed at 77.36 cents, 244 points higher. Jul settled at 78.06 cents, adding 244 points. Dec ended 179 point strong at 75.97 cents. Price limits are back to 3 cents due to nearby futures getting back to the 70 cent level.

Cotton futures closed out the week on a better note for the bull. July was down 284 points this week, with December 134 points lower. A weaker US dollar helped to close out the day with losses of 218 points. Cotton futures collapse was largely caused by the slide in crude oil prices this week. Crude oil prices fell towards seven-week low after the U.S. jobs data further dimmed prospects of an early decline in interest rates. Lower oil prices make cotton-substitute polyester less expensive.

USDA's weekly export sales report showed net sales of 97,400 running bales (RB) for 2023/2024, down 45% from the previous week and down 20% from the prior four-week average. The report also showed exports of 180,000 RB, down 31% from the previous week and down 39% from the prior four-week average.

Monthly export data from Census showed 1.63 million bales of cotton (excluding linters) shipped during March. That was a 3.63% increase over the same month last year, and the largest since June 2022.

Last week, the USDA’s Cotton Systems report showed 758 RB cotton consumed by US mills in March, up 48.6% from last year but 25.9% below the Feb use total. Stocks were at 1,307 RB, the lowest for March going back 2015.

On planting front, weekly Crop Progress data indicated cotton planting pace in the major states moving along, at Texas was 18% complete, even with normal, and Georgia was 1% above the 5-year average pace at 10%.

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 down 11 bales on the first of May at 186,110 bales. The Cotlook A Index was back down 175 points on May 2 at 83.55 cents/lb. The AWP dropped another 78 points to 60.55.

Commitment of Traders data shows managed money in cotton futures and options flipping to a new net short position during the week that ended on 4/30 to -1,934 contracts that was a bear move of 11,435 contracts on the week the ended on Tuesday.

For Monday, support for the Jul Cotton contract is at 75.79 cents and 73.51 cents, with resistance at 79.48 cents and 80.89 cents.

(By Commoditiescontrol Bureau: 09820130172)

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