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Weekly: ICE cotton prices maintain weak stance amid slowing demand and crop progress

20 May 2024 9:13 am
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Mumbai, 20 May (Commoditiescontrol): Cotton prices remained subdued during the week ending May 17th, impacted by an optimistic U.S. crop progress report and slowing demand, which dampened expectations for a price rise.

ICE cotton futures edged lower on Friday, resulting in a weekly loss as weak demand and profit-taking influenced the market. The July cotton contract fell by 35 points to close at 75.89 cents per pound, while December and March contracts each dropped by 22 points to 74.97 cents and 76.58 cents per pound, respectively. The July contract declined approximately 1.7% over the week.

Despite a 2% rise in cotton prices on Thursday due to investor interest following a recent price drop, the rally was short-lived. The U.S. Department of Agriculture's (USDA) weekly export sales report revealed net sales of 156,500 running bales (RB) for 2023/2024, a 38% decrease from the previous week, with exports falling by 4% to 238,800 RB.

The latest Crop Progress report indicated that cotton planting is advancing in key regions, with 28% of the crop planted in Texas, aligning with the average, and Georgia slightly ahead at 35%, which is 3% above the average. However, adverse weather forecasts are expected to slow planting across the Southeast, including eastern Texas.

Globally, the USDA’s World Agricultural Outlook Board (WAOB) revised its carryout estimates for the 2023/24 cotton season downward by 2.6 million bales to 80.48 million, due to a smaller carry-in. Despite this, the WAOB projected an increase in 2024/25 ending stocks by 2.53 million bales to 83.01 million.

ICE certified cotton stocks increased by 5,969 bales on May 15, reaching 188,839 bales. The Seam reported the sale of 216 bales on May 16 at an average price of 59.95 cents per pound. The Cotlook A Index rose by 90 points on May 16 to 85.10 cents per pound, while the Adjusted World Price (AWP) dropped 18 points to 59.46 cents, effective through next week.

Large managed money speculators added 1,615 contracts to their net long position as of May 14, but remained net short by 15,314 contracts, the largest net short position in nearly 11 months.

Traders anticipate technical support for the July cotton contract on Monday at 75.35 and 74.81 cents, with resistance at 76.63 and 77.37 cents.

Despite intermittent rallies, the cotton market remains under pressure from weak demand and profit-taking, with traders closely monitoring weather developments and planting progress for future price direction.

(By Commoditiescontrol Bureau: 09820130172)

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