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Weekly: ICE Cotton Marginally Up On Hopes Of US-China Deal

10 Nov 2019 8:57 pm
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MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange closed the week with marginal gains. Most active December contract traded in a range of 161 points before settling 49 points up for the week.

The ICE December contract closed up 49 points at 64.72 cents/lb for the week while the March20 contract closed at 66.57 cents/lb with a gain of 93 points. The December-March spread strengthened to 185 points from previous weeks 141 points.

Cotton prices started the week on a bearish note anticipating a healthy harvest report and managed money increased their net short position indicating negative view on the market but losses were limited due to strong equity markets and energy prices. But the market recovered during the week news of US-China trade deal and both the countries rolling back tariff, bullish demand-supply data published by USDA and strong equity and crude oil market.

On Monday USDA detailed the weekly harvest data for the week ended Novemeber3. Data showed harvesting had improved to 53% compared with 46% a week ago and five year average of 51 %.

Meanwhile, the USDA released strong export sales data for the week ended 31st October on Thursday. As per data weekly export-sales were 52% up from previous week at 164,500 running bales (RB) for 2019/20 marketing year. The positive point was China was a net buyer for 23500RB and negative was cancellations of 65900 RB from Indonesia.

Data released by the US Commodities Futures Trading Commission data for the week to October 29 showed managed money traders continued to increase their net short position.They increased their net short position by 9149 contracts to 15247 contracts. At the same time trade continued reduced their net short position.They reduced their short position by 4267 contracts to 30895 contracts. Open interest for the week stood at 317135 contract up by 4643 contracts on the week.

The main reason for which the market was moving down was US-China trade dispute and ample global supply this crop year. Hopes of US-China trade dispute getting resolved supported the market to recover from lower levels and now downward revision of global supply and ending stock by USDA will give further support to the market .But if this rally has to continue we should see additional buying support to absorb the excess supply.

As of now upside in the market appears to be limited since managed money have turned negative on market again and trade has large unhedged position it is likely that with every rise in market we will see selling from trade to hedge their position.Further rising spread between Dec-March is indicating weakness in market in near term.

This week markets will be looking development in US-China trade deal ,Cop progress report and Export sales data for market direction.

Support for March contract is at 63 cents/lb and resistance is at 69 cents/lb.

(Commoditiescontrol Bureau)

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