MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange saw volatile trade this week amid mixed cues from the US-China trade deal and data detailed by the United States Department of Agriculture.
The most active May cotton contract ended up 0.5% for the week at 73.49 cents per lb. Through the week, it traded in an over two-cent range with the low touching at 72.51 and the high at 74.90. The July contract ended at 74.63 cents, down 0.5% during the week.
On Monday, prices had risen as optimism surrounding the US-China trade deal continued. However, the rise could not be sustained because of lack of follow-through buying.
Tuesday, the market was back hoping for the best on the trade deal, pushing up the prices. Various officials making statements favouring the deal also confirmed that negotiations were on track.
In an interview to a newspaper on Tuesday, U.S. Secretary of State Mike Pompeo said there will be a “significant announcement in the coming days or weeks.”
However, soon contradictory comments spilled out as well turning markets jittery and by Wednesday traders turned cautious, pulling prices down.
Chinese Commerce Minister Zhing Shan had commented that the trade talks with the US had been difficult.
The weekly US cotton export sales data released by USDA on Thursday seemed to have little effect on the markets as the crop forecasts for the month of March were in focus.
USDA data showed that net export sales of upland cotton in the week to Feb 28 were higher at 114,028 for the old crop, compared with 85,500 a week ago. China cancelled sales worth 1,200 RB. For the new crop, export sales were at 25,692 RB. Export shipments were 383,900 bales.
By Friday the markets seemed to have read into the US WASDE report which left forecasts for 2018-19 on most domestic parameters unchanged.
US opening stocks estimates for 2018-19 were left unchanged at 4.30 million bales, while the production in the country was also kept unchanged from February levels at 18.39 million bales. Consumption is expected to be 3.20 million bales, same as projected in February. Ending stocks were also left unchanged at 4.30 million bales.
The USDA’s forecast for global cotton production in 2018-19 was revised slightly up to 118.89 million bales compared with 118.45 million bales projected in February.
The cautious trade was highlighted in the report detailed by the US Commodities Futures Trading Commission. Open interest for the week ended March 5 showed an increase of 5,728 to 266,273. Managed money traders had net short positions of 18,301 lots, during the week they added 2516 lots in long postion and reuced the shorts by 207 lots thereby registering a decrease of 2,723 lots net short postion over the previous week.
This week, markets will absorb every information that trickles in about the US-China trade negotiations. With comments from officials about the trade deal turning wary, there are views that negotiations may have hit a roadblock.
Friday, US President Donald Trump told reporters he will not sign the pact unless it is a "very good deal."
White House economic adviser Larry Kudlow said that Trump’s meeting with Chinese President Xi Jinping to seal an agreement could get postponed to April.
Fundamental demand and supply factors may also keep prices soft amid expectations of surplus production in 2019-20.Further Macros are also not supportive for the market.
Earlier this week, global think-tank Cotlook said it expected cotton production surplus at 515,000 tonnes in 2019-20 compared with a deficit of 217,000 in this season.
A slowdown in the European economy and quantitative easing resulted in a surge in the dollar further slow down February chines exports by 20% will keep cotton price under pressure in the near term.
On the technical side, cotton prices may test the support and resistance levels of 72.74 and 74.00 respectively. Once they break past these, the second support and resistance levels are seen at 72.00 and 74.52.
(By Commoditiescontrol Bureau)
0 Comments 
Post Comment 
