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ICE cotton futures fall as traders up net short position

7 May 2024 8:32 am
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Mumbai, 7 May (Commoditiescontrol): The ICE cotton futures retreated further lower on Monday, extending their slide to more than 18-month low, as traders raised their net short position, which overshadowed gains spurred by positive sentiment in wider oil and financial markets. ICE cotton speculators switched to net short position of 8,230 contracts in week to April 30 on Friday.

ICE Cotton contracts for May closed at 76.56 cents, 80 points lower. Jul settled at 77.06 cents, losing 100 points. Dec ended 66 point weak at 75.31 cents. Price limits are back to 3 cents due to nearby futures getting back to the 70 cent level. The outside influences had little effect, as the US dollar index was up 42 points, with crude oil 57 cents higher.

Cotton futures closed out last week on a better note for the bull. However, July was down 284 points or 3.51% for the week, with December 134 points lower.

The US cotton crop was reported at 24% planted as of Sunday, a 9% move over the last week. The normal planting pace for the crop is 20% complete by May 5.

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.

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 unchanged on May 3 at 186,110 bales. The Cotlook A Index was down another 30 points on May 3 at 83.25 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 April 30 to -1,934 contracts that was a bear move of 11,435 contracts on the week the ended on Tuesday.

For Tuesday, support for the Jul Cotton contract is at 75.77 cents and 74.47 cents, with resistance at 79.10 cents and 81.13 cents.

Investors' focus this week is set on the USDA monthly WASDE report due on Friday.

(By Commoditiescontrol Bureau: 09820130172)

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