MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange ended down marginally last week following the US tariff threat on Mexico in addition to the strong plantings progress data.
The most active July cotton contract ended down 0.5% to 68.08 cents per lb. The December contract also ended down 0.5% at 67.07 cents per lb. Volumes in the July contract stood at 14,405 compared with 14,084 a week ago.
The July contract touched a one-week low of 68.00 cents amid views that the likely tariffs on Mexico could hamper trade between the two countries.
US President Donald Trump tweeted that the US would impose a 5% tariff on Mexico June 10 onwards in retaliation to the illegal migrants coming from Mexico. Although cotton trade between US and Mexico is insignificant, Mexico is an important trading partner for the US.
The strong plantings progress data released late Tuesday also helped push down prices.
The US Department of Agriculture’s planting report showed the 18 cotton-growing states in US had planted 57% of the crop as on May 26 compared with 61% a year ago. Texas stood at 48% compared with 50% a year ago. Georgia had completed 76% of its plantings compared with 64% a year ago.
As per trade sources due to extreme weather abandonment are likely to be higher than projected. Further yield is likely to be on par with 5year average if weather is favorable in June and July. There is a possibility of late or replanted acres to corn.
Meanwhile, the weekly export sales for the week to May 23 showed a modest improvement. Net sales of the old crop stood at 288,800 RB, down 24% from the previous week, but up 17% from the prior 4-week average. Net sales of the high-grade Pima totalled 1,500 RB compared with 2,100 RB a week ago.
Data released by the US Commodities Futures Trading Commission data for the week to May 28 showed managed money traders added 1761 contracts to long position and reduced short position by 121 contracts thereby reducing net short position by 1882 contracts to 35204 contracts. On the other hand Producers/Merchant (Trade) reduced there long position by 2071 contracts and short position by 649 contracts thereby adding 1423 contract to their short position taking it to 24913 contracts.
This week, the planting progress data and the weekly export sales data would continue to offer near-term market direction. The World Agricultural Demand and Supply Estimates to be released on February 8 is also likely to be closely eyed. It remains to be seen if US and China will initiate any dialogue at the Group of 20 countries meeting on June 28-June 29, although hopes of such reconciliation remain dim.
Texas is likely to receive rainfall and storms until the middle of this week while there could be some respite for Georgia’s heat wave with isolated storms predicted for the state in the next few days.
Expiry of July contract is likely to keep market volatile for next few weeks. The July contract is seen moving in the 67.49-69.18 cents range this week.
(By Commoditiescontrol Bureau)
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