Mumbai, 30 Sep (Commoditiescontrol): Cotton futures started the week on a strong note, hitting a three-month high, but saw a pullback in the second half, ending the week with a decline.
ICE cotton futures closed lower on Friday, weighed down by sluggish demand despite earlier concerns about potential storm-related crop damage in Georgia. The December contract settled at 72.72 cents per pound, down 0.30 cents for the day, while March and May contracts also dipped, closing at 74.52 and 75.61 cents per pound, respectively. Overall, the December contract recorded a weekly loss of 80 cents, its first after two consecutive weeks of gains.
The decline comes despite broader market support from a recent 50-basis-point rate cut by the U.S. Federal Reserve, which helped lift cotton prices by 1.5% in August. However, weak demand and disappointing U.S. export sales have weighed heavily on the market. U.S. export data for the week ending September 19 showed cotton bookings at a marketing-year low of 87,784 running bales (RB), with Turkey and Pakistan as the top buyers. Shipments also fell to a marketing-year low of 79,504 RB.
In external markets, the dollar index dropped 91 points, while crude oil futures gained $0.97 per barrel. Looking ahead, stimulus measures in China and dry weather in Brazil may provide some support for cotton prices, though demand remains uncertain.
On the supply side, Tropical Storm Helene, which may strengthen into a hurricane, threatens U.S. cotton crops. About 63% of the crop is showing open bolls, and 14% has already been harvested. However, crop quality continues to be a concern, with good/excellent ratings falling to 37%, while poor/very poor ratings rose to 33%.
Other market updates include The Seam’s report of 868 cash cotton bale sales on Thursday, with prices averaging 67.83 cents per pound. ICE cotton stocks remained unchanged at 265 bales. Meanwhile, the Cotlook A Index fell 90 points to 84.90 cents per pound, and the USDA Adjusted World Price (AWP) increased by 223 points to 61.06 cents per pound.
The weekly CFTC data showed that managed money spec funds reduced their net short position in cotton futures and options by 12,969 contracts as of September 24, bringing the total net short to 17,549 contracts. Traders are now awaiting the USDA’s next weekly export sales report for further direction. Key technical support levels are at 71.62 and 70.51 cents per pound, with resistance at 73.89 and 75.05 cents per pound.
while the potential for storm-related damage and global market dynamics may offer some upward pressure, weak demand continues to weigh heavily on cotton futures, raising concerns for the market’s near-term outlook.
(By Commoditiescontrol Bureau: 09820130172)
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