Mumbai (Commoditiescontrol): ICE cotton futures edged lower this holiday-shortened week. The most active December cotton contract closed with a loss of 52 points or 0.60 percent at 93.50 cents per lb, whereas March 22 contract lost 0.53 points or 0.60 percent and finished at 92.73 cents per lb for the week ended on 10th September.
The cotton market had positive gains each trading day of the week through Wednesday, while on Thursday the market turned negative, but recovered its losses on Friday after a very strong export number.
The U.S. Department of Agriculture (USDA)'s weekly crop progress report on Tuesday showed 61 percent of the cotton crop was in a good-to-excellent condition in the week ending Sept. 5, down from 70 percent in the prior week. The report also said 54 percent of Texas crop was in good-to-excellent condition last week, down from 68 percent in the previous week.
USDA reported cotton export bookings of 453,042 RBs for the week that ended 9/2. That was a 52-week high, driven by 261k RBs sold to China. Exports were 155,270 RBs, taking the season’s total to 937,348. That is still 37 percent below 2020/21’s pace.
In its September World Agricultural Supply and Demand Estimates (WASDE) report, the USDA projected U.S. production at 18.5 million bales, 1.2 million bales higher than the previous month, bringing its ending stock estimate of 700,000 bales higher to 3.7 million bales.
The weekly data release from CFTC showed managed money was 91,107 contracts net long on 7th September; up 1,666 contracts from the previous week. Long side positions increased by 1,066 contracts, while short side positions witnessed a fall of 600 contracts. Trade increased their long side position by 736 contracts and short increased by 4,683 contracts. The open interest for the week was registered at 332,370 vs 325,693 contracts last week.
Cotton-on-Call based New York, dated 9th September showed that the total unfixed call sales were reported at 155,528 vs 152,563 contracts on a weekly basis and total unfixed call purchases were reported at 42,170 vs 40,641 contracts. For December 2021, unfixed call sales were registered at 52,520 vs 54,032 contracts and unfixed call purchases were registered at 18,148 vs 18,248 contracts.
Meanwhile, the Labor Department reported first-time unemployment claims of 310,000 as of September 4, compared to expectations of 335,000. This is the lowest level since March 14, 2020 and is one indicator that the labor market is getting healthier.
China cotton and yarn complex closed mixed last week. ZCE benchmark cotton yarn was down for the fourth consecutive week. Jan 22 futures contract was marginally down by 0.12 % at 25195 CNY/MT . On the other hand ZCE benchmark cotton Jan22 futures managed to close the week with gains of 0.2% 17745 CNY/MT. The underperformance of yarn futures is indicating slow down in demand for yarn and fabrics.
Looking ahead next week, traders will keep an eye on the crop condition report due on Monday and weekly exports on Thursday. In addition, next week there will be a CPI number (inflation) on Tuesday, and retail sales on Thursday.
As the arrival of Indian cotton is likely to start shortly and underperformance 0f Chines cotton and yarn futures are indicating limited upside in ICE cotton. The only positive could be a depreciating dollar index which can provide some support to cotton in the near term. Immediate support and resistance for Cotton #2 lies at 91.11 and 95.31 cents per lb, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
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