Mumbai, 20 June (Commoditiescontrol) ICE cotton futures came under severe pressure due to strong gains in dollar index, weakness in other markets such as grans market and financial markets as well. However, Cotton prices are likely to gain support from firm fu damentals and revivied buying at lower level next week.
For the week ended June 18 July cotton contract lost 258 points or 3 percent and finished at 84.42 cents per lb whereas most active December contract closed with loss of 274 points or 3.1 percent at 85.18 cents per lb .July/Dec spread was 76 points down 16 points from previous week’s 92 points.
Ice cotton came under selling pressure last week along with grains as weather condition condition imporved in the US grain growing belt. Apart from weak grains market strong dollar also lead to fall in commodity prices . Influence of outside market and firm Us dollar was so strong that favourable fundamental factors such as dryness in Texas main cotton growing belt and strong export sells were not able to support prices much.
Cotton export sales and shipments had another strong week with Pakistan, China and Vietnam as the primary buyers and cancellations remained near nil. Net sales totalled 113,300 bales of Upland and 2,300 bales of Pima. Shipments were impressive; 303,800 bales of Upland and 12,000 bales of Pima.
Cotton-on-Call based New York, dated 17th June showed that the total unfixed call sales were reported at 117,280 vs 113,434 contracts on a weekly basis and total unfixed call purchases were reported at 47,947 vs 48,962 contracts. For July 2021, unfixed call sales were registered at 10,039 vs 13,552 contracts last week and unfixed call purchases were reported at 3,628 vs 3,879 contracts. Thus, the volume of cotton for which the price must the fixed (buying of futures contracts) is rapidly growing each week.
Meanwhile, Crop Progress and Condition Report showed a huge 28 percent jump in Texas planting pace to bring the nation back on track. 90 percent of the crop is now planted and the last bits should be in the ground over the next two weeks.
Next planting report will be released June 30, but will be based on information and conditions as of June 1, 2021. USDA’s report is expected to report U.S. cotton plantings near 11.4 million acres, compared to 12.1 million acres planted in 2020, or down 3.7 percent from 2020. It is estimated that rising competitive crop prices in March-April-May caused growers to make a late shift of 250,000 acres out of cotton and into grains/oilseeds.
Market participants are now keeping a close eye on the Potential Tropical Cyclone Three near the Gulf of Mexico and awaiting a planting acreage report at the end of the month. Traders are also keeping an eye on the currency markets for signs of stabilization in the value of the U.S. dollar, which surged after the Federal Reserve announcement.
Next week market is likely to get support at lower levels as fundamental are still strong for cotton .Adverse weather condition. reduction in US sowing acreage and strong export sales are likely to support markets at lower level but strong dollar may cap major gains.
Immediate support and resistance for Cotton #2 lies at 83 and 89 cents per lb, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
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