Mumbai, 16 Sep (Commoditiescontrol): U.S. cotton futures marked significant gains this week, influenced by a mix of domestic and global variables. The most active December contract wrapped up the week at 86.44 cents per lb, marking a 52-point increase. In contrast, the March 2022 contract experienced a noteworthy surge of 127 points, concluding at 87.36 cents per lb for the week ending on September 15.
The week kicked off positively, partly attributed to a weakening U.S. dollar and strategic buying ahead of the World Agricultural Supply and Demand Estimates (WASDE) report. Concerns over U.S. cotton crop health due to weather and the addition of long positions by managed money the preceding week provided further support. However, the week's momentum was checked following the WASDE report's release, as a strengthening dollar and reduced demand expectations from China, a primary cotton buyer, emerged.
A key data point was the USDA's WASDE report on Tuesday, predicting a 1.7 million-bale reduction in global cotton production for the 2023-24 season. As the U.S. plays a vital role in the global cotton market, this forecast significantly impacted future projections. Another noteworthy piece of data, a USDA report released on Thursday, indicated a week-on-week reduction in net cotton sales, representing a potential weakening in demand.
The latest figures from the CFTC revealed that managed money held a net long position of 40,865 contracts as of September 12, marking a decrease of 5,218 contracts from the previous week. This reduction indicates a subtle pullback in bullish sentiment, with long positions dropping and short positions noting a slight rise. Open interest for the week also showcased a minor decline compared to the prior week.
In international markets, China's cotton and yarn complex ended the week on a positive note. ZCE's benchmark cotton yarn contract for January 24 increased by 475 points, concluding at 23,115 CNY/MT, while its cotton futures for January 24 noted a gain of 100 points, closing at 17,200 CNY/MT.
State-owned China National Cotton Group Corp and other buyers are accumulating Australian cotton in Chinese warehouses, anticipating an end to a three-year import ban due to improving Beijing-Canberra relations. Chinese customs data reveals that in the first seven months of this year, 43,364 metric tons of Australian cotton entered China, over double the total of 2022, with an extra 1,148 metric tons passing through customs.
Persistent rains in India's cotton-producing areas, expected to last through the end of October, could further disrupt the global supply landscape.
ICE cotton futures are expected to stay volatile in the short term, influenced by challenging weather conditions in both the U.S. and India. For the December Cotton #2 contract, the immediate support and resistance levels are set at 85 and 90 cents per lb, respectively.
(By Commoditiescontrol Bureau; +91-9820130172)
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