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ICE cotton futures surge on low acreage, demand revival hope

9 May 2024 8:51 am
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Mumbai, 9 May (Commoditiescontrol): ICE cotton futures surged on Wednesday, led by hopes of low acreage and fresh demand after prices had fallen to multi-month lows in the previous sessions. Market observers believe the report this Friday will confirm low planted acreage number.

ICE Cotton contracts for May closed at 80.06 cents, 306 points higher. Jul settled at 80.06 cents, adding 256 points. Dec ended 195 point strong at 77.70 cents. Cotton limits are reverting to 4 cents due to July creeping back in that 80 cent level. The US dollar index was up 105 points, a negative input, while crude oil was 86 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.

Weather condition is expected to improve for a wide swath of the Southeast US over the next week, stretching from Central/Eastern Texas and parts of the panhandle to the East Coast. This may help to slow what has been a fast paced planting season thus far.

Earlier this week, the US cotton crop was reported at 24% planted as of Sunday, a 9% advance over the last week. The 5 year average planting pace for the crop is 20% complete by May 5, according to USDA/NASS. Of the major cotton acreage states, Texas was 3% faster than normal at 24%, with Georgia 4% ahead at 21%.

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 down 16,020 on decertification on May 7 at 168,770 bales. The Cotlook A Index was up 160 points on May 7 at 84.85 cents/lb. The AWP dropped another 78 points to 60.55. It will be updated tomorrow afternoon.

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 Thursday, support for the Jul Cotton contract is at 78.12 cents and 76.19 cents, with resistance at 81.14 cents and 82.23 cents.

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

(By Commoditiescontrol Bureau: 09820130172)

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