MUMBAI (Commoditiescontrol) - ICE March cotton traded in a range of 290 points for the week ended Feb 15 and finally settled down 233 points at 70.22 cents/lb.
The week opened with a drop of 200 points on Monday following bearish acreage report released by the National cotton council (NCC) on last Saturday. The market was down again next day due to follow through selling and bull liquidation. The market was also under pressure due to contract rollover and uncertainty about US-Chian trade deal. However, better exports sales and some bargain hunting supported the market and helped it to recover from lower levels.
In the long term, a sharp increase in crop estimates for the US and Brazil will be bearish for the market.NCC raised acreage forecast by 2.9% and crop size 22.7 million bales up 4.31 million bales from current year estimate of 18.39 million bales. Similarly, Brazil’s crop estimate is around 11.8 million bales, up 2.6 million bales from last year's 9.2 million bales. Along with this, lower mill use forecast by USDA will result in an increase in world ending stock. Further as per CFTc report for the week ending January 15, speculators were net short by 1.26 million bales indicating a further downtrend in the market.
These bearish factors are likely to keep ICE cotton price trend down in the medium term.
For coming week, prices may see some recovery as on last Friday financial markets and crude oil were sharply up on the anticipation that US-china trade deal will be done. This optimism may spillover in the cotton market in the coming week. Further, as per market sources, export sales for remaining weeks on Feb 22 are likely to be much better which could be supportive for the market. The market is extremely oversold and rollover from March to May contract is almost complete. So any positive news may result in a pullback rally for cotton for short term.
On Monday ICE cotton will remain closed for a federal holiday, President’s Day.
(By Commoditiescontrol Bureau)
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