Mumbai, 7 Oct (Commoditiescontrol): Cotton futures ended the week with a modest gain, driven by the reopening of U.S. ports and weather-related disruptions. The December cotton contract posted a weekly increase of 55 points, closing at 73.27 cents per pound on Friday.
This recovery was supported by the resolution of a major port strike that had disrupted trade on the U.S. East and Gulf Coasts. Along with this, March and May contracts firmed, closing at 75.28 and 76.52 cents per pound, respectively.
The boost in futures came after U.S. ports resumed operations following a tentative wage deal between dockworkers and port operators, which ended the industry's largest strike in nearly five decades. However, the backlog of cargo remains an issue, and clearing it may take time, potentially influencing future cotton shipments. The rally in oil prices, driven by geopolitical tensions in the Middle East, further contributed to positive market sentiment. Brent crude oil futures climbed by $0.83 per barrel as traders anticipated Israel’s response to a missile attack from Iran.
Despite the positive momentum, the stronger U.S. dollar, which surged following a stronger-than-expected jobs report, limited the upside for cotton prices by making U.S. exports less competitive globally. The Commitment of Traders data showed a reduction in the net short position, with traders trimming 5,402 contracts, bringing the total to 12,147 contracts as of October 1.
U.S. export sales commitments continued to lag behind the USDA's forecast, with total commitments at 5.055 million running bales—13% lower than last year and slower than the average pace.
Meanwhile, India’s cotton crop outlook remained promising, with better yields expected compared to the previous year. However, concerns arose due to higher-than-normal temperatures affecting some cotton plants in northern regions, particularly causing wilt in a small percentage of crops. Nonetheless, the overall yield is forecast to be higher than last year, with northern India expected to produce about 4 million bales.
Market participants are closely watching support levels for the December cotton contract, with key levels identified at 72.48 and 71.70 cents per pound, while resistance is seen at 73.70 and 74.14 cents per pound.
While cotton futures gained strength from improved trade conditions and rising oil prices, the stronger dollar and weather challenges kept gains in check. Moving forward, traders will monitor developments in U.S. exports and weather patterns in key cotton-growing regions.
(By Commoditiescontrol Bureau: 09820130172)
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