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Weekly: ICE Cotton Ends 2019's Final Week on Positive Note; Sentiments Soar on Trade Deal hopes

29 Dec 2019 8:48 pm
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Mumbai (Commodities Control) - ICE cotton futures settled close to 1.4% higher on a weekly basis, marking its fifth consecutive week of gains. Cotton futures in the March contract traded higher for the 7th consecutive session after settling, last Friday in New York, at 67.96. The most active-contract closed up about 115 points for the trading week hitting a 7-month high.

On Friday, ICE Cotton contract for March 20 settled 22 points higher to 68.92 cents per lb. It traded within a range of 68.5 and 69.33 cents a lb. While May 20 Cotton closed at 70.08, up 23 points.

Through the week, sentiments were buoyed by optimism around a U.S.-Sino trade deal and a weaker dollar that overshadowed a dismal export sales report from the U.S. Department of Agriculture (USDA).

Meanwhile, the USDA in its weekly export-sales report showed net sales of 135,100 running bales (RB) for the 2019/20 marketing year, down 46% from the previous week and 44% from the prior four-week average, for the period ended Dec. 19.

The top countries buying our cotton exports were Vietnam (46,361 RB), and Turkey (29,742 RB). Shipments for the same week were at 202,090 RB, which was 5.22% below last week and down 2.43% yr/yr. Pakistan and Bangladesh were the top two destinations for weekly shipments. Vietnam and China remain the top countries for total upland cotton commits through the MY.

The Seam Online Cotton Trading platform reported 15,120 bales sold 26th December, pushing the holiday week total to 40,644 bales. The new AWP is 58.85 cents/lb, up 112 points from last week and good through next Thursday.

Traders are still rallying on hopes of a China deal and the world economy looks a lot better.

The world's top two economies announced their Phase 1 deal earlier this month, but have since disclosed few concrete details. Beijing said this week it was in close contact with Washington on the pact.

Meanwhile, money-managed speculators have finally turned net long. The incentive for them to reverse from their long-standing bearish course was formally triggered when the market closed above its 200-day moving average for several consecutive sessions. That indicator is a technical staple in the trading toolbox of trend-following funds and traders.

The dollar index was down 0.5%. A weaker greenback makes commodities priced in dollars, such as cotton, less expensive for holders of other currencies.

Certificated cotton stocks deliverable as of Dec. 26 totaled 11,699 480-lb bales, unchanged from 11,699 in the previous session.

Commitment of Traders report is delayed this week, due to Christmas holidays. It will be released on Monday 30th December.

Next week, the market will continue to have a jumbled holiday schedule. Cotton will be closed on New Year’s Day, with weekly sales and exports pushed back until Friday morning as well. Although Friday’s exports-sales data was not exactly robust, some of its weakness may be attributable to the holidays themselves.

Beyond next week, the market is waiting with bated breath to see a signed deal with China. However, as of this writing, no scheduled date has been set for a formal ceremony. Thus the possibility of high anxiety and prices volatility during January is highly likely.

The support and resistance for the active cotton contract lies at 68.09 cents and 69.75 cents, respectively.


       
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