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ICE Cotton futures gain on weaker dollar and positive market sentiment

14 May 2024 8:32 am
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Mumbai, 14 May (Commoditiescontrol): Cotton futures on the Intercontinental Exchange (ICE) saw a rise on Monday, bolstered by a weaker U.S. dollar and positive trends in broader financial and oil markets. The July cotton contracts closed 32 points higher at 77.63 cents per lb, while the October contracts also increased by 32 points to settle at 77.06 cents. March contracts ended the day 39 points stronger at 77.12 cents.

The dollar's decline ahead of crucial U.S. inflation data expected later in the week played a pivotal role in cotton's upward movement. Concurrently, crude oil prices increased by 94 cents, supporting higher cotton prices as they make cotton's synthetic competitor, polyester, more costly.

Despite the gains, the week overall was less favorable for cotton, with the July contracts closing 1.7% lower, and the December new crop contracts down by 84 points, a decline of 1.11%.

Recent Crop Progress data released on Monday indicated a slight slowdown in the U.S. cotton planting pace, with 33% of the crop planted as of May 12, advancing 9% for the week but only 2% ahead of the five-year average. Improved weather conditions expected across the Southeast U.S. could further influence the planting season's progress.

On the global scale, the USDA's World Agricultural Outlook Board (WAOB) revised the carryout estimates for the 23/24 cotton season down by 2.6 million bales to 80.48 million, citing a smaller carry-in, while projecting an increase in the 24/25 ending stocks by 2.53 million bales to 83.01 million.

In terms of trade, USDA's latest weekly export sales report showed a notable increase with net sales hitting 253,700 running bales for 2023/2024, reflecting strong demand for U.S. cotton. The ICE certified stocks showed a decrease, with 176 bales decertified on May 10, leaving total certified stocks at 166,311 bales.

With ongoing market fluctuations and impending economic reports, the cotton market remains under close watch by traders and analysts alike. For Tuesday, technical support for the July cotton contract is seen at 77.02 and 76.40 cents, with resistance at 78.34 and 79.04 cents.

(By Commoditiescontrol Bureau: 09820130172)

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