Mumbai, 23 Sep (Commoditiescontrol): Cotton futures posted significant gains during the week ended Sep 20th, reflecting the broader positive trend in agricultural commodities. Several factors influenced the upward movement, including the U.S. Federal Reserve’s interest rate cut, optimism in global markets, improving crop progress, and China’s efforts to bolster its economy. However, escalating geopolitical tensions between Israel and Lebanon, along with potential U.S. trade restrictions on Chinese imports, signal potential volatility ahead.
For the week ending Friday, ICE cotton futures surged, primarily driven by short covering and ongoing concerns over supply. The December cotton contract rose by 0.49 cents, closing at 73.52 cents per pound. March and May contracts also posted gains, settling at 75.14 and 76.16 cents per pound, respectively. December futures recorded a robust weekly gain of 370 points, supported by strong early-week performance and improved sentiment after the U.S. Federal Reserve’s 50-basis-point interest rate cut.
August marked the end of a four-month losing streak for cotton futures, with a 1.5% monthly gain. The market is now responding positively to declining interest rates, which are expected to weaken the U.S. dollar and increase purchasing power for foreign buyers. Additionally, rising crude oil prices, which make polyester—a cotton substitute—more expensive, further boosted cotton’s price trajectory.
Looking ahead, the cotton harvest in Texas could face disruptions due to forecasted rains in the panhandle next week. Despite mixed signals from crop reports, analysts expect the bullish trend to continue. The USDA’s latest Crop Progress report indicated that 39% of U.S. cotton was rated in good or excellent condition, down slightly from the previous week. However, the Brugler500 index showed a two-point improvement in crop quality, particularly in Texas and Georgia.
On the export front, U.S. Export Sales data for the week ending September 12 showed cotton bookings at 106,801 running bales (RB), the lowest in four weeks but still higher than last year’s figures. Vietnam emerged as the top buyer with 51,600 RB, followed by Pakistan with 24,500 RB. Export shipments rose 9.16% year-on-year, totaling 130,049 RB, with Vietnam and Pakistan as the leading destinations.
Other key market data for the week included online cash sales reported by The Seam, totaling 4,212 bales at an average price of 69.92 cents per pound. ICE cotton stocks remained unchanged at 265 bales, while the Cotlook A Index dropped by 95 points to 82.80 cents per pound. The USDA Adjusted World Price (AWP) rose by 283 points to 58.83 cents per pound on Thursday.
Globally, cotton production forecasts were reduced by 1.2 million bales, with world ending stocks now expected to fall to 76.5 million bales. Traders continue to monitor key technical levels, with support at 72.81/72.10 cents and resistance at 74.23/74.94 cents.
The past week demonstrated strong bullish momentum for cotton futures, driven by improving market sentiment and robust demand from key global buyers. While weather disruptions in the U.S. and geopolitical tensions remain concerns, the overall outlook for cotton prices remains positive as traders await further developments in both domestic and international markets.
(By Commoditiescontrol Bureau: 09820130172)
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