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Weekly: ICE Cotton Manages Positive Closing Amid Stronger Export Sales

2 Dec 2019 8:23 am
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MUMBAI (commoditiescontrol): Cotton prices on the Intercontinental Exchange (ICE) traded in a tight range over the holiday-shortened week. It ended a tad bit positive last week largely owing to stronger exports data for the week ended November 21 and trade deal with China.

The ICE most active March contract closed 51 points up at 65.36 cents/lb for the week while May 20 contract closed at 66.39 cents/lb with a gain of 45 points. The March-May spread was at 103 points.


The factors primarily responsible for the last week’s trade were primarily strong Export sales and the ‘Phase-1’ trade deal between the U.S and China. The positive development with the deal did propel energy in the market until the midweek. However markets gave up some of the gains on news that President Trump signed the Hong Kong human rights act in support of protesters after markets closed has irked China into threatening of retaliatory actions. The uncertainty kept the traders baffled through the truncated week.


Although, the weekly export sales data did provide cushion to the prices. Export sales continued stronger during the week ended November 21 with net sales of 281,500 bales, up 24 percent from the previous week. Total new sales of 379,000 bales of Upland for the 2019-20 marketing year were offset by cancellations of 97,500 bales (29,900 by China and 67,500 by Mexico). An additional 23,800 Upland bales were sold for the 2020-21 marketing year. This week’s biggest buyers of Upland included Vietnam (73,600 bales), China (69,500 bales) and Turkey (67,800 bales). Shipments were better this week at 184,400 bales of Upland and 11,200 bales of Pima.


Another reason behind Cotton futures performing better last week were the Spot Markets. The Seam’s G2B platform traded more than 40,000 bales during the shortened trading week. The average price received by producers was 58.91 cents per pound, up 86 points from the previous week’s average. The average premium over the CCC loan was 6.29 cents per pound, 24 points more than the previous week.


Last Week NASS reported the weekly harvesting across the U.S. continued ahead of pace at 78 percent versus the 5-year average of 74 percent as of November 24.The Southwest and Eastern regions of the U.S. remain ahead of schedule while parts of the Mid-south continue slightly behind their 5-year average. Many areas in West Texas and Oklahoma experienced cold, wet weather during the last few days. Sunny skies forecast for the coming week will help producers with unharvested crops return to the field.

CFTC Commitment of Trader data for the week ending November 26 was not released last week due to Thanksgiving holiday. Now it will be published on Monday 2nd December.

A week on week strong export sale is keeping markets supported but still this would not be sufficient to absorb large US crop as US is projected to close the marketing year with a multi-year high closing stock. Along with this gradual fall in the premium of Indian cotton prices will be creating competition for US origin cotton and likely to put pressure on prices.

Support and resistance for March cotton is 65 cents/lb and 67.5 cents/lb.


       
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