Mumbai, 18 Nov (Commoditiescontrol): Last week ICE cotton futures faced challenges. The December contract softened 5.89% to end at 66.80 cents per pound, marking a three-month low. The decline reversed the gains of the previous week, driven by a stronger U.S. dollar, weak export data, and bearish trends across financial and commodity markets.
The December, March, and May contracts all recorded losses, with March settling at 68.91 cents and May at 70.28 cents per pound. A steady U.S. dollar, coupled with a $1.74 per barrel drop in crude oil prices, added to the downward pressure. Analysts noted significant speculative selling throughout the week, spurred by bearish technical signals and increased farmer selling. Additionally, cotton shipments from U.S. ports intensified supply-side concerns.
The USDA's weekly export sales report underscored weak demand, showing upland cotton sales at 153,300 running bales for the 2024/2025 season—a 33% drop from the previous week and 18% below the four-week average. Domestically, the U.S. cotton harvest advanced swiftly, with 75% of the crop harvested, surpassing the seasonal average by 8%. Ginnings reached 4.696 million bales by mid-November, marking a five-year high.
The USDA's updated report slightly lowered U.S. cotton production estimates to 14.19 million bales and reduced export projections by 200,000 bales to 11.3 million. Ending stocks were revised upward to 4.3 million bales, reflecting a less optimistic outlook for demand.
Market sentiment was further dampened by Federal Reserve Chair Jerome Powell's comments, signaling no urgency for rate cuts, which weighed on commodities and equities. The CFTC data revealed an increase in managed money funds’ net short positions, up by 2,934 contracts to 13,851 as of November 12, highlighting a bearish stance among speculators.
Looking forward, traders expect March cotton futures to find support at 68.28 and 67.64 cents, with resistance levels near 70.10 and 71.28 cents. Uncertainty around global trade dynamics and potential policy changes could shape the market trajectory in the coming weeks. Despite the current bearish sentiment, traders remain cautious as they monitor global demand and economic policy signals.
The week marked a sharp downturn for cotton futures amid a mix of weak export sales, a robust dollar, and broader market pressures. While technical factors hint at potential support levels, the market remains under the influence of macroeconomic and trade uncertainties.
(By Commoditiescontrol Bureau: 09820130172)