MUMBAI (Commoditiescontrol) - Cotton prices on the Intercontinental Exchange (ICE) remained volatile last week ahead of the March contract expiry and amid conflicting news about the US-China trade deal.
After a federal holiday on Monday, the futures had opened firm on Tuesday on hopes of a positive resolution to the US-China trade talks. However, the market failed to retain gains amid conflicting news that the trade talks may get pushed beyond the Mar 1 deadline.
After moving in a narrow range until Wednesday, prices rose sharply on Thursday, with the March contract ending the day with a gain of 191 points. The gain was mainly following US President Donald Trump’s comments late Wednesday hinting that the US-China trade talks were going well adding that that American agricultural community would be a big beneficiary. Hopes of positive exports numbers for Jan 4-Feb 14 on Friday had also buoyed sentiment.
However, markets turned volatile on Friday with the March contract ending down 35 points to 71.84 cents/lb after touching an intra-day high of 72.99 cents/lb as the export data was lower-than-expected. For the six week period, export sales were 977,100 RB, while the weekly average stood at 162,833 RB, below market expectations of 1.2-1.6 million bales. The USDA’s forecast for 2019-20 cotton production was pegged at 22.5 million bales and carryout rising 2 million bales to a burdensome 6.3 million bales.
According to the Commodity Futures Trading Commission report, managed money continued to increase their short positions as on 29th January they were net short by 11412 lots or 1.18 million bales.
This week, expectations of higher US cotton production and ending stock for 2019-20 are likely to keep a bearish undertone on prices. In addition, the US-China trade talks will be keenly eyed and any uncertainties over it may keep markets volatile this week.
Technically, the May contract may test lows of 65-57cents /lb as the market seems to have resumed a downward trend after a brief pullback rally last week.
(By Commoditiescontrol Bureau)